The Internal Revenue Service said Tuesday that it will speed up some of the paperwork distressed homeowners need to refinance or sell their homes. It’s the first of what may be several IRS changes made to help troubled taxpayers through the current recession, said Doug Shulman, the service’s commissioner.
Specifically, IRS is speeding up its currently 30-day process by which it removes tax liens against a home that normally would deter a potential buyer or cause a lender to decline a refinancing request. The service similarly is speeding up paperwork for subordinating a lien by giving the lender’s stake in a refinancing higher priority than any overdue taxes the lien is designed to catch.
How much faster the process will go hasn’t been determined, but Fred Schindler, IRS’ collections policy director, told a telephone press conference that some applications could be turned around in as little as two weeks.
Also, removing or relaxing the liens won’t help a cash strapped taxpayer reduce their tax debt, Schindler said. IRS simply will attach the lien to other property, cars, wages or other assets. IRS estimates there currently are about 1 million outstanding tax liens attached to real and personal property in the U.S.
Shulman said at the press conference that the IRS also is looking at its offers-in-compromise programs, installment payment plans and loan refinance options for ways to potentially help distressed taxpayers.
Those potential relief actions aren’t ready to be announced yet, “but we want to do what we can under the constraints of law and common sense,” Shulman said.