Release of Federal Tax lien?

[bbqpops]

What is the name of your state (only U.S. law)? Nebraska

I would like to purchase the home I am in. The rent payments exceed what I would be paying for the principle, interest, taxes and insurance. It just makes sense to buy the home.

The homeowner will pay closing costs, but we are exploring paying these on our own to keep leverage in the purchase price.

I have a Federal Tax Lien that is currently for less than $6K and has been in a payment agreement for two years. The payments are being voluntarily withheld from my paycheck.

What is the probability that the IRS would release the lien under these circumstances? (If I go through the required steps for asking to have this done?)

Your experience and advice are appreciated.

 

[Zigner]

If you have enough cash to buy the house, then you should have enough cash to pay what you owe. That's the way the IRS sees it

 

[bbqpops]

If you have enough cash to buy the house, then you should have enough cash to pay what you owe. That's the way the IRS sees it

I don't have the cash to pay the lien outright, or I would. Hence, the need for the payment plan.

The purchase of the home would actually release funds previously tied up for living expenses.

Does the fact that I have been successfully paying this debt down have any bearing with the IRS?

I understand the simple logic you present, Zigner. And was wondering about about any past cases/situations where this was granted.

Thanks for your honesty.

 

[HomeGuru]

What is the name of your state (only U.S. law)? Nebraska

I would like to purchase the home I am in. The rent payments exceed what I would be paying for the principle, interest, taxes and insurance. It just makes sense to buy the home.

The homeowner will pay closing costs, but we are exploring paying these on our own to keep leverage in the purchase price.

I have a Federal Tax Lien that is currently for less than $6K and has been in a payment agreement for two years. The payments are being voluntarily withheld from my paycheck.

What is the probability that the IRS would release the lien under these circumstances? (If I go through the required steps for asking to have this done?)

Your experience and advice are appreciated.

**A: why would the IRS release the lien? Pay the lien off first then buy the house. Or you can buy the house via installment contract and still be on the IRS payment schedule. Keep in mind that if you default on your IRS payment schedule, they can place a lien on your new home.

 

[bbqpops]

This is a quote from a tax debt help website:

"Many times taxpayers cannot pay off the taxes in full so the IRS has payment plans available for taxpayers to pay off the taxes overtime. If you choose to pay off the taxes overtime, the lien will still remain in effect in most cases, unless you setup a direct debit installment agreement. As long as you have less than $25,000 in tax debt, generally as of February 2011 or thereafter, an IRS Installment Agreement that is setup with a payment arrangement as direct debit (which means monthly payments are automatically withdrawn from your checking account) can lead to a tax lien being withdrawn upon request. The IRS states though first a period of succussful payments must be shown before the lien will be withdrawn. Before these policy changes, or if you setup a different type of agreement, the IRS will not reduce the tax lien when payments are made, meaning the entire balance of the tax lien will show until the total amount of taxes are paid."

I feel that I have established a period of successful payments, though I realize that the decision is not my call. Under these new policies enacted in February 2011.

I know absolutely that paying off the debt is the easiest and most tactical route. However, right now, that isn't possible. I am looking to downsize my overall obligations in order to get out of any necessary debt.

 

[davew128]

Contact Collectons and ASK them. If they feel their interests in getting paid will not be jeopardized they should release the lien.

 

[NC Aggie]

Your question is really not a matter of real estate law, it's a matter of tax law and negotiating with the IRS since they are the lienholder. However, if they're garnishing your pay and a tax lien exists, then payments are being within INvoluntarily (not voluntarily) so I don't foresee them releasing the lien. You imply there is a "payment agreement" but typically IRS garnishments occur after the IRS has been unsuccessful in collecting owned taxes or making payment arrangments. If you do in fact have an "agreement" with the IRS, you may be able to negotiate different payment arrangements or even an OIC (Offer of Compromise) but this is generally done before they issue a wage garnishment.

 

[bbqpops]

Contact Collectons and ASK them. If they feel their interests in getting paid will not be jeopardized they should release the lien.

Thank you, I did just that.

For clarification purposes, I am the one who set up automatic pay with holding.These payments were not garnishments in the sense that they are INvoluntary withholdings.

I spoke with the gentleman in collections to set my mind at ease.

Currently, I am NOT eligible for this lien release because it is withdrawn from my paycheck. I enetered the payment agreement, and can get it modified to have the payments direct drafted from my checking account. It takes approx.3 months to set this up, and I would need to reflect a positive payment history for the next three months following. I would then need to file for a Certificate of lien release, and get it approved.

The gentleman would notgive an opinion about whether my appication would be approved or not, but simply stated that my very good history of paying this debt would help my case.

***If there is a way for the moderators to move this to The Tax Law section, please feel free.