June 22, 2018

timeline fed tax lien removal

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.

Last Updated on June 22, 2018 by Minna Reid

About the author 

Minna Reid

Minna Reid is The Broker - Owner of Reid Real Estate Group. Reid Real Estate Group is a full-service Connecticut residential real estate brokerage, specializing in helping homeowners with legal and financial challenges including short sales, probate sales and tax lien complications.

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  1. Hello I am looking to buy a preforclosure but it has about $300k
    In federal tax liens. If I take over the mortgage and decide to purchase what can I file to have those liens canceled,withdrawn and or discharged from the property so I can either keep for main residence or sell it. The property needs work do to lack of maintenance which will be a $60k$80k. Can I file a form 6525 (b)2(b) myself and get an inspection and an appraisal on the property to have the liens canceled or withdrawn? Thanks for your time..

    1. If the owner is selling you the property and title is transferring, and IRS is not getting paid in full from the sale, the current owner will need to apply for the lien discharge.

      1. How long does this process save? The IRS agreed to release the lien but the seller never signed the paperwork and died recently. Now the kids are selling the home, got power of attorney and refilled for the release. What kind of time frame are we talking for the irs to sign and release so sale can happen?

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