When overdue federal taxes are not addressed, the IRS will ultimately seek to add liens onto any property owned by the taxpayer. That means the property cannot be sold or transferred without addressing the overdue taxes. You can in fact sell your property if tax liens are attached, even if the tax debt cannot be paid in full, or at all.
Federal Tax Lien Discharge Timeline
What is the right time to apply for the lien discharge?
As soon as you have secured a buyer for the home. The IRS will not consider your application prior to this time and waiting until the transaction is further along simply causes an unnecessary delay.
When will I get a response?
If executed absolutely perfectly the first time – you can expect to receive a discharge from the IRS within 30-45 days of initial application assuming:
- The package is 100% complete without any missing documentation
- All your documentation is without error
- The sale proceeds have been requested to be distributed in a way IRS prefers
The problem with IRS is that they are knows for speed or communication. What that means to you is that it is highly unlikely that you will ever be able to find a live human to speak with about your application before this initial 30-45 day time frame is up.
So – even in the case of a single error or omission, you will simply not be notified until the IRS gets back to you after 30-45 days, at their leisure. When they do, and you make the correction, you can expect at least a few days to pass for your correction to be reviewed….and rinse and repeat for every request thereafter.
Whether the tax lien is being paid in full, in part or whether there are no proceeds for the tax lien (such as in a short sale situation), the IRS will be looking for similar paperwork as detailed in this guide.
The average homeowner would not have the ability to produce or complete all the required documentation on their own. It is critical that the professionals assisting the home owner with the sale be extremely well versed in the IRS lien discharge process.