or the amount of work done by the attorney.
After the IRS reviews the petition, it will issue a letter of commitment, either Pattern Letter P-402 or P-403. P-402 will be issued under Internal Revenue Code (IRC) section 6325(b) (2) (B) when it’s determined that there’s no equity in the property, which implies that the IRS’ interest in the property is valueless. P-403 will be issued under IRC section 6325(b) (2) (A) when it’s determined that the IRS’ interest in the property is worth a specific dollar amount. In the first case, the IRS promises to issue a Certificate of Discharge upon proof that the taxpayer has been divested of interest in the property. In the second case, the IRS pledges to issue a Certificate of Release upon evidence of divestiture of the taxpayer’s interest as well as the receipt of the specified amount by certified cashier’s check. In many cases, this letter of commitment is sufficient to close, though many title companies remain nervous about waiving the IRS’ lien based on the letter of commitment. Subordination. According to IRS.gov, “subordination” does not remove the lien, but allows other creditors to move ahead of the IRS, which may make it easier to get a loan or mortgage. To determine eligibility, refer to IRS Publication 784, “Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien.” Withdrawal. A “withdrawal” removes the public Notice of Federal Tax Lien and ensures the IRS isn’t competing with other creditors for your property; however, you’re still liable for the amount due. For eligibility, refer to IRS Form 12277, Application for the Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien [Internal Revenue Code Section 6323(j)], according to IRS.gov.
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