Selling your Home when your have an IRS Tax Lien
What is a Certificate of Discharge?It is always help to understand what you are trying to get accomplished. What you are trying to do is remove the lien -- not as against all your property, but only with respect to one asset; that asset is your home. In order to do that you will need to secure a "Certificate of Discharge". A Certificate of Discharge under Internal Revenue Code Section 6325(b) removes the United States' lien from the property named in the certificate.
Why would the IRS release a Tax Lien?The IRS will release its tax lien if and only if its in the best interest of the IRS to do so. But, often you can show the IRS that it will be in their best interest to do so. If your home is underwater, releasing the lien will allow you to sell the property. If doing so, will free up cash flow for other things -- namely, paying your back taxes, then the IRS is better off. For example, selling your home may eliminate HOA dues, property taxes, utility bills, not to mention lower your monthly housing costs by hundreds of dollars. In addition, the bank's mortgage lien was there before the IRS filed the NFTL. Therefore, if the home is worth less than the total of the mortgage liens, the IRS would get nothing anyway from the sale. So, the IRS loses nothing by allowing you to sell your home. In fact, everyone is better off, including the IRS.
Why would the IRS release a Tax LienFirst, complete Form 14135, Application for Certificate of Dis- charge of Federal Tax Lien attached with this publication. A link to this form can be found below. Second, mail the completed Form 14135 and the appropriate attachments to:
IRS, Attn: Advisory Group Manager (Refer to Publication 4235 Collection Advisory Group Addresses for the correct address. The correct address is the office assigned to the location where the property is located.).