Can IRS file a lien for penalties and interest?


L

LarryM

Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?

TIA
Larry
 
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P

Phil Marti

I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
Kinda, sorta, not really. The lien covers all tax, penalty
and interest. The $7196 was the assessed amount due when
the notice was filed, but even then $7196 probably wouldn't
have secured a release because of accrued interest and
penalty. That lien won't be released until the entire
account, including penalty and interest, has been resolved.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate.
There's too much missing information here for any
intelligent advice other than "hire a representative." I
recommend an enrolled agent experienced with balance due
situations. There's a directory available at www.naea.org.

Phil Marti
Topeka, KS
 
P

Paul A Thomas

LarryM said:
Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
Anything they can legally collect (like tax, interest and
penalty) can be collected by lien.
 
H

Herb Smith

Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
Yes
 
C

Charles Markham, EA

What you need to understand is that you don't simply owe the
$7196--that was the amount due on the date they filed the
lien. If you request a "Lien Payoff" right now, fomr the
IRS, the number will be substantially higher than $7196.

There will not be a second lien for penalties and interest,
but that's only because one is not necessary. The payoff
figure will include that.

There is a way to perhaps get the penalties abated as part
of your refinance, but it involves a cooperative refinancing
attorney.

If you contact me offline, I will explain.

Charles Markham
Email: (e-mail address removed)
(to get email address remove the ALL the B's in the
email address above.)
 
J

James

LarryM said:
Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
I had a friend whose tax were mess. back taxes for 7-8 years
(Fed and State). He had to pay before refinancing. I think
he and IRS agreed to pay lump sum first (since it was too
much) and started installment payments.. Anyway it was mess.
even his CPA didn't want to touch his mess..
 
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H

Harlan Lunsford

LarryM said:
Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
When IRS files a lien, it's just that, a lien on your
property for any amounts owed, be they tax, penalty or
interest.

Cheer$,
Harlan Lunsford, EA n LA
 
D

Dave Woods

LarryM said:
Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
I don't see the difference. Apparently you still owe the
original tax, and regardless, the amount of the lien will be
for the full amount of what you owe. Either pay the debt,
find a way to negotiate the penalties (interest isn't
negotiable) or ask the IRS to allow the title company to
refinance that you can take home equity and pay the debt.

--
David M. Woods, EA
Woods Financial Services
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.
 
D

D. Stussy

LarryM said:
Hi all--Thanks for the help. I am trying to refinance my home.
The IRS has filed a lien for back taxes in the amount of $7196.
The title company says they can also file a lien for the
penalties and interest, hence they must be paid off as well.
I am trying to file an abatement for the penalties and interest,
but the IRS says the back taxes must be paid first before they
will negotiate. Help!

Can the IRS really file a lien for penalties and interest?
In the sense that "additions to the tax" are treated as tax
for collection purposes, yes. However, if there's no tax
remaining (i.e. already paid), I don't know about that case.
When I worked for the IRS, I did not work in collection.
The sections numbered in the 6320's in the IRC govern liens.
 
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T

TaxmanHog

D. Stussy said:
LarryM wrote:
In the sense that "additions to the tax" are treated as tax
for collection purposes, yes. However, if there's no tax
remaining (i.e. already paid), I don't know about that case.
When I worked for the IRS, I did not work in collection.
The sections numbered in the 6320's in the IRC govern liens.
The above and all others have responded correctly to the
OP's inquiry.

The following is a bit off track but, for your enlightenment:

It is possible to file a lien in situations where the
balance of assessment is paid but the accruals remain, and
no Notice of Federal Tax lien was filed.

This occurs in cases where no lien was originally filed on
the original balance assessed prior to it being paid,
accruals of interest and penalty may be tremendous or
trivial, it's all subject to the time involved.

What causes this to occur is that the taxpayer sends in a
remittance for the amount owed on the original assessment
letter, which might be a few weeks to many years old.
Depending on the factors the accruals might amount to a few
dollars or tens of thousands of dollars.

The filing of the lien would only be done where the
governments interest in the available equity is at risk and
the amount of accruals is high enough.

The mechanics involved:

A:) Request a lien filing, overlay the balance of
assessments ($0.00) with the current accruals.

B:) Request accounts maintenance to post a No Tax Change,
but assess the accrued Interest & Penalty, then file the
lien on the recently assessed I&P.
 

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