That’s interesting. So the IRS took the assessed value not the appraised value? They’re usually pretty far apart. What do you mean by ‘… an offer in compromise’? Does that mean you’re willing to make an offer to the IRS and in return you want them to release the lien?
I had (have) a situation similar to this. IRS lien of 17k (not including interest) and seller hadn’t made a mortgage payment for 6 months. Lender (Countrywide) is looking to foreclose. I wonder if I could pursue a short sale with countrywide and then try and get a discharge from the IRS lien? Probably a longshot and probably a lot of work. Just curious if that would work. Problem is that the house has a before repair value of about 180k (after repair about 200k). Payoff and IRS liens total about 145k. It would think there’s enough equity here for the lender and IRS to NOT want to do a short sale or IRS discharge.
Once you have deed, if there is little of no equity in the property, it is my understanding that they will remove the lien if you just ask them. (of course this may take months to happen)
I have one little caveat on Buds comment?while working with a seller and an offer in compromise, the IRS agent working the offer told me to use the county assessors tax base for the property value (market vale with certified appraisal $65k ? tax assessed value $32k) he took the 32k tax assessed value. This is only beneficial of course if your seller is already working on an offer in compromise with the IRS. In my case the seller had no equity with the 32k base so they released the property in about a week.
While it is possible as Rob describes it is not easy.
There are two approaches. One is that there is no equity in the property. The other is an offer in compromise. My experience has been that the IRS does not follow their guidelines for prompt resolution or a decision. If there is no equity they may release the property while continuing with the lien against the debtor. Unfortunately, a short sale does not prove no value. They want a full appraisal and a brokers opinion. If they feel there is any equity they will want to be paid that equity.
Yes, you can remove the lien. To do so, you’ll need to use IRS Publication 783 and follow the steps for submittal. The information needed is much the same as your regular lender short sale package.
I noticed your post down the line indicating that this property is a million dollar home. What’s your exit strategy. If you intend to flip the property, I’d like to be provided with the numbers for analysis at verticalbif@msn.com. I buy luxury homes nationwide.