IRS says it will help troubled homeowners

12.24.08
By Sarah Beldo

In tough financial times, any small gesture to help the average person get by may be appreciated - and now the Internal Revenue Service is offering to do its part as well.

Last week, the IRS announced plans to ease the path for struggling homeowners to either sell their house or refinance their home loan.

The plan focuses on liens, which are imposed on people's properties when they have not paid taxes or responded to the service's requests for payments. Over 600,000 federal tax liens are issued each year.

For people in serious financial trouble who need to sell their homes, a federal tax lien can prevent the sale because it takes precedence over a new loan.

IRS commissioner Doug Shulman said that the service will focus on helping people who have traditionally been responsible about paying taxes but have fallen behind due to factors related to the current economy.

The new measures involve speeding up lien relief, which could mean it is less likely that families face foreclosure.

One aspect is accelerating requests by homeowners to make a federal tax lien be secondary to liens by the lender that is refinancing or restructuring a mortgage.

It will also be faster to request that the IRS remove lien on a home if it is being sold for less than the value of the mortgage. However, it is important to note that this does not eliminate the lien completely, but rather moves it to a different item, such as a car.

"We realize these are difficult times for many Americans," Shulman said. "We will ensure we have the resources in place to resolve these issues quickly and homeowners can complete their transactions."

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The IRS plan will focus on helping homeowners who have fallen behind due to factors related to the current economy.