Federal tax liens can be enforced against homestead property. Now, the IRS has come out and said that they will not enforce their liens against the property if it has a purchase money mortgage. So, if the homeowner uses the funds to buy the house, then the IRS is second in line to that lien. However, if the IRS is recorded first in time, they are first in priority. Additionally, there is the US versus Craft decision, which states that the IRS can enforce a federal tax lien against either a husband or a wife. In the case of US versus Craft, I believe it was the husband. The IRS can enforce a lien against the husband when the property is owned tenants by the entirety. When you encounter an IRS lien during a sale, whether it is a short sale or a conventional sale, what do you do? The title company calls you and says, "Hey, this homeowner has an IRS lien against the property." You can use Form 135, the application for a certificate of discharge of property from a federal tax lien. It is a fairly simple and straightforward form, although it is about 45 pages long. It requires a lot of information, such as the settlement statement, the contract, property values, appraisals, copies of other liens involved, and title searches. All of this information needs to be combined into a package. In my experience, the packages that I've submitted have been 40 to 50 pages each. You then submit the package to the IRS and ask them to do one of two things. Number one, release the lien because there is no equity available for the IRS in this short sale. Number two, let us proceed with the closing and whatever is left will be paid...
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Federal tax lien priority Form: What You Should Know
Accordingly, under the Private Sales and Private Leases liens and priority rules, the MM or PSI has priority under state law over a private tax lien, and the private tax liens do not have priority over a state tax lien. Under the Private Sales liens and priority rules, the MM or PSI has priority as to a lien of the principal dwelling on the principal residence. The tax lien of the MM or PSI does not have priority as to a tax lien that arises under the sales or leases transaction but the tax lien of the property of the MM or Psis does have priority under the private sales and private leases' lien rules. Federal Tax Liens — Federal Tax Lien on Property The priority of property tax liens to the MM or PSI is determined by U.S.C. 1-1641 ET. seq. The federal tax lien arises when a public entity (the Service) has been assessed a tax by the taxing authority that has been determined in accordance with applicable state law to be valid, which has been properly filed with the Department of Revenue for payment of the tax. The Service will be notified in writing of any lien in lieu of filing a tax lien by the Department. The Service may, in accordance with U.S.C. 1-1641 et seq., notify the department of its intent to exercise its authority to file lien in lieu of filing a tax lien upon the Secretary's written request, and with a statement that the lien is being filed in lieu of filing a tax lien. If the Secretary is notified of the intent to file a lien in lieu of filing a tax lien, the Secretary will, within ten (10) working days, determine whether to file a tax lien in lieu of filing a tax lien. If the lien is filed, the lien is valid, including the privilege of collecting the tax.
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