IRS Levies & Liens
Houston Tax Attorney
The IRS’s lien for unpaid taxes attaches to all property owned by the individual. This can prevent the individual from selling or transferring their property or refinancing the property. There are several potential remedies that can help in this situation. One of these remedies is the IRS certificate of discharge.
The IRS Certificate of Discharge
The term “IRS certificate of discharge” refers to the paperwork the IRS issues to remove its lien from a specific property.
The certificate of discharge does not remove the IRS lien entirely, it just removes it for the specific property listed in the certificate.
It also does not extinguish the tax liability. The IRS can still collect the tax liability from the individual.
When Can the IRS Issue a Certificate of Discharge?
The law provides specific circumstances when the IRS is authorized to issue a certificate of discharge:
- The equity in the property is at least double the value of the IRS debt (and any other priority debt).
- The individual pays the IRS the amount determined by the IRS to be equal to the amount the IRS could collect from the property.
- The property has no value or the IRS lien does not attach to anything of value.
- The property is to be sold and the proceeds are held in an account subject to the IRS’s lien.
The circumstances that can qualify for these rules can very greatly, as there are a number of nuances to these rules that are set out in court cases and administrative guidance.
The IRS Certificate of Discharge is Permanent, Usually…
The certificate of discharge is a permanent remedy. Once issued, it cannot be revoked by the IRS. This is true even if the individual continues to not file or pay their taxes (the IRS would obtain a new lien for any new tax liability that is not paid). But again, there are nuances that must be considered. For example, there is an exception that applies if the individual reacquires the property after the certificate is issued. The lien re-attaches to the property under state after-acquired property laws.
Third Parties Can Also Obtain Certificates
It should also be noted that the IRS certificate of discharge can also be obtained by third parties whose property is subject to a lien for taxes owed by another party. This situation often comes up when a spouse who owes taxes transferred property to the other spouse, for example. To obtain a certificate, the individual has to deposit an amount of money with the IRS equal to the value of the property or provide a bond in this amount.
We are former IRS employees who help taxpayers with IRS collections issues, including discharge certificates. We offer compassionate, individualized service at manageable rates.
If you are in a situation where you cannot pay your debt owing, call today for a confidential consultation. Our number is 713-909-4906.Previous post: Can the IRS Collect from a Single-Member LLC?
Next post: Managing IRS Debts With Retirement Account Assets