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Ask Phil: Taxes & Real Estate

Today, Optima Tax Relief’s Lead Tax Attorney, Phil Hwang, discusses taxes and real estate, including buying, selling, and refinancing your home while owing taxes. 

Tax Liens

Real estate transactions can quickly become tricky if you owe taxes and even more so if the IRS places a tax lien on your property. This means that if you sell your home, after the bank is paid, the IRS will then have first dibs on any profits from the sale. That said, it’s not impossible to sell your home while a tax lien is attached to it. However, it might make it more difficult. Plus, you’ll likely lose out on profits. One option you have is to request a lien discharge with IRS Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien. The IRS may consider discharging the lien if: 

  • You want to take out a loan against the property and use the funds to pay your tax bill and need the lien to be discharged in order to qualify for the loan 
  • You want to refinance your existing home loan so you can afford monthly tax payments 
  • You want to sell the property and agree to pay the IRS the profits of sale up to the lien value 
  • You want to sell or transfer the property but there is no value that the IRS can claim 

Refinancing While Owing Back Taxes

When it comes to refinancing while owing back taxes, you’ll need to apply for a lien subordination through IRS Form 14134, Application for Certificate of Subordination of Federal Tax Lien. This will request that the IRS allows your mortgage refinance lender to move ahead of the tax lien in priority.  

Tune in next Friday for another episode of “Ask Phil.” Next week’s topic: tax extensions! 

If You Need Tax Help, Contact Us Today for a Free Consultation 

Ask Phil: IRS Enforcement

Today, Optima Tax Relief’s Lead Tax Attorney, Phil Hwang, discusses IRS enforcement, including the statute of limitations and how it might affect your credit report. 

Did you know the IRS has a certain amount of time to collect your tax debt before it expires? How long? Well, the simple answer is 10 years, but several factors can pause this timeline. For example, filing for bankruptcy, living abroad, applying for an installment agreement, submitting an offer in compromise, applying for innocent spouse relief, applying for a taxpayer assistance order, requesting a collection due process hearing, serving in the military, or being sued by the IRS can all pause the 10-year collections period 

Many also wonder if IRS enforcement can affect your credit. The IRS can file a Notice of Federal Tax Lien, or a priority claim over all of your assets. While this notice does not show up on your credit report directly, it does become public information that creditors can access through supplemental reports. This can affect your access to credit, business opportunities, and even employment. 

Join us next Friday as Phil will answer your questions about levies and wage garnishments! 

If You Are Being Hit with IRS Enforcement, Contact Us Today for a Free Consultation 

Ask Phil: Liens

Welcome to our Ask Phil series, where each week our lead Tax Attorney, Philip Hwang will be answering your questions about various tax topics such as IRS enforcement, liens and levies, tax scams, and more. With Phil’s extensive background as a tax attorney, you won’t want to miss this valuable information! 

Today, Phil discusses liens, including when to worry about them and how to get them removed.  

A lien is a legal claim against all of your property when you fail to pay a tax debt. A lien is private information only known to you and the IRS until they file a Notice of Federal Tax Lien. This essentially means that the IRS alerts all creditors that they have the first claim over all of your assets, from property to vehicles to bank accounts. At this point, the federal tax lien becomes public information, meaning that anyone can find out about your tax debt. This can affect your access to credit, business opportunities, and even employment.  

Once a federal tax lien is in place, the best way to get it removed is to pay your tax debt in full. Once the balance is paid in full, the IRS typically releases the lien within 30 days. However, sometimes other options may be available. For example, a process called lien subordination allows creditors to outrank the IRS, making it possible for you to refinance your home. It’s important to note that this does not remove the tax lien attached to your property. To find out if you’re eligible for lien subordination, you should file IRS Form 14134, Application for Certificate of Subordination of Federal Tax Lien, with the help of a knowledgeable tax professional.  

Tune in next Friday as Phil covers the important topic of penalties and interest! 

If the IRS Has a Lien on Your Property, Contact Us Today for a Free Consultation