Property Tax Lien Programs

When homeowners don’t pay real estate taxes, the Internal Revenue Service and some state income tax boards seek tax exemptions homes as a way of securing the debt. These exemptions make certain you can’t market your property without paying off the lien. When exemptions go unpaid, taxing bodies occasionally obtain a tax levy, which gives the taxing body possession of the house. Typically, though, homeowners can use special programs to resolve tax liens before the fiscal implications become much worse.

Installment Programs

Homeowners can enter to an IRS installment plan to avoid a tax lien. When the lien is in place, homeowners can use an IRS installment plan to repay their debt. The IRS is not as likely to sell a house when the owner is making payments, but the lien remains until all of the debt is paid. Under this type of program, the taxpayer can agree to get a monthly payment debited from a bank account or deducted by a payroll check. Taxpayers also can pay by credit card, check or money order. The IRS charges a $105 fee for installment agreements. Many states, including California, also allow installation programs for homeowners. Back in California, an installation program can be utilized to remove a lien or to prevent a lien. According to the state Board of Equalization, it doesn’t put a lien on property as soon as an installment agreement is in place unless the taxpayer fails to comply with the agreement.

Offer in Compromise

The IRS and the California Board of Equalization have a tax exempt program known as an offer in compromise. This is an arrangement between a taxpayer and the taxing body to settle a tax debt for less than the entire amount owed. An offer in compromise is difficult to obtain. According to the IRS website, there are three instances that might give taxpayers an chance for an offer in compromise. To begin with, there has to be uncertainty that the tax can be accumulated. This might be the case for an person who has little to no equity in a house. The next instance is when there is uncertainty that the citizen is responsible for debt. The third case is when collecting the debt is deemed to make an economic hardship or would be unfair. The IRS uses the illustration of a family caring for somebody with a long-term illness. When collecting the debt, such as through a tax lien, is deemed to make a significant hardship, the citizen could apply for an offer in compromise and receive approval.

Partial Release

In some cases, taxpayers can request a partial release of a tax lien. This provides the property owner with options which aren’t otherwise available. For example, the California State Franchise Tax Board permits a partial release of a lien when a property owner should move rights to the property, even though there are insufficient funds from the transfer to satisfy the state tax lien. Below a partial launch, the lien remains in place although the other party has rights to the property. Partial releases are also permitted when the taxpayer does not have any rights to title of the property. As an example, a homeowner might request a partial release of a lien when a creditor wishes to market the property. When a partial launch is permitted, the taxpayer is not able to transfer title of different properties owned or obtained.


In the federal and state levels, subordination is a way by which property owners can address a lien. Subordination doesn’t release the lien, however it allows the property owner to manage financing linked to the property. In the end, subordination produces a tax lien much lesser priority than the other lien on the property. Often, the lien is a house mortgage. By providing the mortgage lien precedence, lenders can modify loans, and taxpayers can refinance the loans. In some cases, this enables the property owner to place himself in a better fiscal position and potentially pay off the lien. Property owners must request subordination of a tax lien, and the taxing body needs to determine that such action is warranted.

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