There are various actions you can take if a lien is placed on your property, which are determined by how much you owe and specific laws in your area. If there is a federal tax lien on your home, you must satisfy the lien before you can sell or refinance your home. There are several options to satisfy the tax lien. According to IRS.gov, if you have equity in your property, the tax lien is paid (in part or in whole, depending on the equity) out of the sales proceeds at the time of closing. If the home is being sold for less than the lien amount, the taxpayer can request the IRS discharge the lien to allow for the completion of the sale. Taxpayers or lenders also can ask that a federal tax lien be made secondary to the lending institution’s lien to allow for the refinancing or restructuring of a mortgage. The IRS currently is working to speed requests for discharge or mortgage restructuring to assist taxpayers during an economic downturn. To support taxpayers facing financial challenges, the IRS continues to refine its policies regarding federal tax liens. While the agency has updated certain thresholds for specific small- value properties in line with inflation, it has not implemented a broad increase in the overall dollar amount at which liens are filed. Instead, the IRS remains focused on case-by-case evaluation and relief mechanisms to ease the burden on compliant taxpayers while still ensuring collection of unpaid taxes. A notable example of taxpayer-focused policy is the IRS’s treatment of Direct Debit Installment Agreements (DDIAs). When taxpayers commit to making regular payments through direct debit and meet key eligibility criteria, including remaining balances under a certain amount and a record of timely payments, the IRS may agree to withdraw an active federal tax
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