One of my clients and friends is a psychiatrist specializing in marriage counseling. We have lunch once a month and I always leave the restaurant exhausted, overwhelmed by his explanations of how differently men and women see things, process information, and how women value things men often don’t value hardly at all. That is one of the reasons why in my law practice I invite both spouses to conferences. That way both can learn the issues and likely resolutions directly from me and not “distilled” through their spouse.
So today we’re going to discuss a couple of issues that wives value above so many other things – their homes.
- Seizure by IRS
Without exception, every wife that comes into my office asks if the IRS can seize their home to pay taxes. That question is first and foremost on their minds. They know that in Texas their home cannot be sold by a creditor but they are unsure if Texas law allows the IRS to seize it.
The answer is yes, the IRS can and does seize and sell the homestead of someone who owe federal taxes. The state laws barring such sales do not apply to the IRS.
However, the process of seizing and selling a homestead is immensely complicated. For example, sometimes the IRS can do so administratively, sometimes it has to go into federal court to do so. Many of these rules are different.
Also, there are some hardship exceptions. The IRS can be barred from seizure if only one of the spouses is liable for the tax liability. If there is little or no equity in the home, or if there are children involved, or if there are certain other hardships — all of these factors as well as many others — affect the IRS’s ability and willingness to sell a homestead.
Bottom line – get an attorney to help you who is familiar with federal tax laws and federal court proceedings.
- Sale or refinance of residence
Many people voluntarily sell or refinance their home to raise money to pay taxes or other bills, or to start a business. If the IRS has a federal tax lien on file, they are afraid that a lender cannot lend or buyers cannot get clear title. That is generally not true.
The IRS has a complicated process for allowing these loans and sales to occur free of the federal tax lien. It takes a lot of time and paperwork – and negotiation — but it can be done. Sellers, buyers and lenders typically are unaware of this but it’s true.
So, you can owe taxes and keep your house, sell it, or refinance it if you know what you’re doing and plan in advance. The point is not to be a victim – get expert help and solve the problem.
As for you husbands out there, if you’re facing a tax liability that could result in the sale of your home, get someone capable right away to make sure “she’s” protected. If you do, you may be protected from her and the IRS as well.