IRS Will Assist Homeowners by Subordinating or Discharging Tax Liens

The IRS yesterday announced (IR-2008-141) two forms of relief for financially strapped homeowners if one of the more than 1 million existing federal tax liens is preventing the refinancing of their mortgage or the sale of their home:

• Subordination of Tax Lien.  Homeowners seeking to refinance their mortgage can request the IRS to subordinate its tax lien.  Details are in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien.  Requests for a Certificate of Subordination are sent to one of forty Collection Advisory Groups listed in Publication 4235, Collection Advisory Group Addresses.
• Discharge of Tax Lien.  Homeowners seeking to sell their home for less than the amount of their mortgage can request the IRS to discharge its tax lien. The IRS also ican ssue a certificate of discharge in other circumstances if the taxpayer has sufficient equity in other assets, can substitute other assets, or is able to pay the IRS its equity in the property. Details are in Publication 783, Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien. Requests for a Certificate of Discharge are sent to one of forty Collection Advisory Groups listed in Publication 4235, Collection Advisory Group Addresses.

Press and blogosphere coverage:

• Associated Press
• Wall Street Journal
• WebCPA