North Charleston, S.C. (PRWEB) December 31, 2008
The IRS understands the financial strains homeowners are currently under and is trying to give them some assistance. This assistance is coming in the form of expedited lien relief, which JK Harris Enrolled Agent Bill Wandel sees as a "win-win situation for everyone."
"In these times of financial distress, this is a good thing and will probably benefit both sides," said Wandel, who is also a CPA for JK Harris, the nation's largest tax representation firm.
Wandel explained that the quicker the IRS processes these requests, the quicker taxpayers will be able to sell or refinance their homes, and the quicker the IRS will receive money owed for the back tax debt.
A federal tax lien serves as public notice to other creditors that the IRS has a claim on the property as security or payment for a tax debt.
What the IRS is attempting to do is speed up the process for taxpayers to request and receive a discharge or a subordination of a tax lien. Normally the process takes 30 days after the complete application has been submitted. How much faster this process will be has yet to be determined.
By discharging or subordinating a tax lien, the IRS is essentially removing a blockade that prevents homeowners from selling or refinancing their homes. Under certain circumstances, a lien can be discharged if the home is being sold for less than the amount of the mortgage lien. Homeowners can also request the tax lien be made secondary to the lien by the lending institution that is refinancing or restructuring a loan.
"The IRS will subordinate a lien as long as the proceeds in excess of the principal balance goes to them," Wandel said. "When you refinance, it frees up the proceeds, and it's a win-win situation for everybody. If you are refinancing to get a better rate and to reduce the amount of your monthly payment, that will work too because the additional disposable income can be used to make monthly payments on a tax debt. However, if you refinance to pay off credits cards, but you owe the IRS, that's not going to work."
In a recent release by the IRS, Doug Shulman, IRS Commissioner, said, "We realize these are difficult times for many Americans. We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions."
To apply for a certificate of lien subordination, taxpayers can use IRS Publication 784 (http://www.irs.gov/pub/irs-pdf/p784.pdf) as a guideline. To apply for a tax lien discharge, IRS Publication 783 (http://www.irs.gov/pub/irs-pdf/p783.pdf) should be used.
For more information on tax liens, visit the IRS website at http://www.irs.gov.
About JK Harris:
JK Harris & Company, LLC, (http://www.jkharris.com) based in North Charleston, S.C., is the nation's largest tax representation firm and has served over 225,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 325 locations nationwide by appointment only. The company also provides services for student loan debt, fee-based financial planning, tax return preparation, and audit representation.