Automated Tax Credit - Tax Debt Resolution

IRS Tax Lien Discharge

An IRS tax lien is a legal document or claim placed on your property to secure unpaid taxes. If You’re facing a tax lien and want to remove it from a specific property, you may be eligible for a discharge. With Automated Tax Credits, you can accomplish this while saving thousands of dollars in tax firm fees!

Am I Qualified to Appeal My IRS Tax Lien?

To determine if you qualify for an IRS tax lien discharge, consider the following factors:

Your Tax Debt

The IRS is more likely to agree to a discharge if it believes it will improve its ability to collect the tax debt.

Property Value

If your remaining property is worth at least twice the value of the lien, you may be eligible for a discharge.

Reason for Discharge

The IRS may consider your reasons for seeking a discharge, such as:

Financing

You need to take out a loan against the property to raise funds for various purposes, such as:

  • Debt consolidation
  • Home improvements
  • Business expenses
  • Education
  • Medical expenses

Refinancing

You want to refinance an existing loan to:

  • Lower your interest rate: Reducing your monthly payments and saving money over time.
  • Extend your loan term: Spreading out payments over a longer period to lower monthly payments.
  • Access equity: Borrowing against the value of your property to access cash.

Selling

You plan to sell the property to:

  • Relocate: Move to a different area or home.
  • Downsize: Move to a smaller or more affordable property.
  • Upgrade: Move to a larger or more luxurious property.
  • Financial gain: Profit from the sale of the property.

Transferring

You need to transfer the property to:

  • A family member: Gift or sell the property to a relative.
  • A business partner: Transfer ownership of the property to a business partner.
  • A trust: Place the property in a trust for estate planning purposes.
  • A charitable organization: Donate the property to a charity.
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How Can I Apply for an IRS Tax Lien Discharge?

Key Steps in the Process:

1. Gather Information:

Collect necessary documents like property deeds, titles, and appraisals. You may also need to provide proof of income, expenses, and other financial information.

2. Complete Form 14135

Provide detailed information about the property, your tax debt, and the reason for the discharge. Indicate which section of the tax code applies to your request:

  • Section 6325(b)(1): If the property remaining with you is worth at least twice as much as your tax debt, you may be able to remove the lien without making a payment. You'll need to provide evidence of your property's value.
  • Section 6325(b)(2)(A): If you agree to make a payment equal to the IRS's interest in the property, the IRS may discharge the lien. You'll need to submit proof of ownership transfer and a final settlement statement.
  • Section 6325(b)(2)(B): If you can prove that the property has no value, the IRS may discharge the lien. You'll need to provide proof of ownership transfer and a final settlement statement.
  • Section 6325(b)(3): If you need a discharge to sell the property, you can agree to place the owed funds in an escrow account. You'll need to provide proof of the escrow arrangement and details of any other creditors' claims.
  • Section 6325(b)(4): If you make a deposit or purchase a bond equal to the value of the tax lien, the IRS may discharge the lien. If you're not the taxpayer, you may be able to request a refund under certain circumstances.

3. Attach Supporting Documents

Include any required documentation to support your application, such as:

  • Property deeds, titles, and appraisals
  • Financial statements
  • Proof of income and expenses
  • Escrow agreements
  • Settlement statements
  • Other relevant documents as requested

4. Submit Application

Mail the completed form and attachments to the appropriate IRS address (which corresponds to the state where the property is located) specified in the instructions.

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How Automated Tax Credits Can Help

Automated tax credits can significantly simplify the process of applying for an IRS tax lien discharge. By providing a guided approach, these tools can help you:

  • Identify the most suitable options: Automated systems can analyze your specific situation to determine the best course of action and identify the appropriate tax code sections.
  • Gather necessary documents: The tools can provide checklists and reminders to ensure you have all the required documentation ready.
  • Complete forms accurately: Automated tax credits can assist you in filling out IRS Form 14135 and other relevant forms, reducing the risk of errors and delays.
  • Track progress: The system can keep you on top of the status of your application and provide updates on any required actions.
  • Save thousands of dollars in tax accountant fees: By using automated tools, you can avoid the high costs associated with hiring a tax professional to handle the discharge process.

By leveraging automated tax credits, you can streamline the process, increase your chances of a successful IRS tax lien discharge, and save thousands of dollars in tax accountant fees.

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Frequently Asked Questions

What is the difference between an IRS tax lien subordination and an IRS tax lien discharge?

  • Subordination: The IRS agrees to let its lien take a lower priority, or “subordinate” than another entity’s lien.
  • Discharge: The IRS completely removes the lien from a specific piece of property.

A tax attorney can advise you on the best approach for your specific situation.

What is the difference between a lien discharge and a lien withdrawal?

  • Discharge: The IRS removes a lien from a specific asset.
  • Withdrawal: The IRS completely removes the lien.

To get a lien released and withdrawn, you typically need to pay the full balance.

Can you discharge a federal tax lien to execute the sale of your own home?

If you’re selling your home, you can apply for a federal tax lien discharge under IRS code sections 6325(b)(2)(A) or (B).

  • Section 6325(b)(2)(A): If you earn money from the sale, you’ll generally need to make a payment to the IRS.
  • Section 6325(b)(2)(B): If you don’t earn any money from the sale, you may be able to discharge the lien without making a payment.

Note: When selling your home, consider filing Form 12451 (Request for Relocation Expense Allowance) to potentially reduce the total amount you need to pay to the IRS.

How long does it take to file Form 14135?

Filing Form 14135 should take approximately 7 hours and 40 minutes according to the IRS. This includes time for record keeping, legal research, form completion, and mailing.

When should you file Form 14135?

If you’re selling property or applying for a loan, it’s recommended to file Form 14135 at least 45 days before the closing date to ensure timely processing by the IRS.

Can you discharge an estate tax lien?

To request a discharge of an estate tax lien, file Form 4422, or The Application for Certificate Discharging Property Subject to Estate Tax Lien. Note that Form 14135 is specifically for federal income tax liens.

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