Your Home Is at Risk of Foreclosure. Can IRSProb Help?

Is It the Bank or the IRS Putting Your Home at Risk?

Foreclosure, tax liens, levies, and seizures are not the same thing.

A mortgage foreclosure generally happens when a lender or servicer moves forward against the property because the loan is in default.

A federal tax lien is the government's legal claim against your property because of unpaid federal taxes.

It can make selling or refinancing more difficult, but it does not mean the IRS has already taken your home.

An IRS levy or seizure goes further. That is when the IRS actually takes property to collect a tax debt.

The IRS explains the difference in its guidance on federal tax liens, levies, discharge, and subordination.

Before choosing a solution, you need to know what is really happening.

Is the bank foreclosing? Has the IRS filed a lien? Is the IRS actively collecting? Or are several of these issues happening at once?

IRS Debt and Foreclosure: 5 Ways IRSProb May Help

1. Find Out Exactly What Is Happening With the IRS

Before talking about payment plans or settlements, we need the actual numbers.

How much do you owe? Which years are involved? Are all returns filed? Has the IRS filed a Notice of Federal Tax Lien? Is there an installment agreement or levy action?

An old IRS notice may not show where your account stands today.

IRSProb can review the tax situation and look at options that fit the facts.

That may include reviewing tax years, balances, notices, lien filings, current collection activity, and existing agreements before deciding what kind of IRS resolution should be considered.

2. See If There Is a Better Way to Handle the IRS Debt

Sometimes the IRS is not threatening the house directly.

The bigger problem is cash flow.

If you are trying to catch up on the mortgage while also making a large IRS payment, it may be time to review whether the current arrangement still makes sense.

An IRS installment agreement may allow eligible taxpayers to pay over time.

For someone in more serious financial hardship, Currently Not Collectible status, or CNC, may be worth reviewing.

If the IRS agrees that paying the tax would keep you from covering necessary living expenses, it may temporarily delay most collection activity.

The IRS provides more information about IRS financial hardship and temporary collection delays.

An Offer in Compromise may be another option in the right case.

It can allow some qualifying taxpayers to settle for less than the full amount owed.

But home equity matters.

The IRS considers income, expenses, ability to pay, and assets. Owning a home does not automatically disqualify you, but the equity can affect the analysis.

You can review the IRS's general Offer in Compromise information.

There is no one IRS program that is automatically best just because foreclosure is possible.

3. Deal With an IRS Tax Lien If You Need to Sell the Home

For some homeowners, selling may become the best available option.

A federal tax lien can make that sale more complicated.

If there is enough equity, some or all of the available proceeds may need to go toward the IRS debt at closing.

In other situations, a lien discharge may be worth reviewing.

A discharge can remove the federal tax lien from one specific property if the requirements are met and the IRS approves the request.

A discharge does not necessarily erase the tax debt.

It deals with the lien on that property so the transaction may move forward. Any remaining IRS balance may still need to be handled separately.

The IRS discusses this process in its guidance about a federal tax lien on your home.

Timing matters. IRS guidance recommends submitting a discharge application at least 45 days before the transaction date when the certificate will be needed.

You can review the IRS lien discharge application guidance in Publication 783.

4. Look at Lien Subordination If Refinancing Could Help

Refinancing or restructuring the mortgage may make the payment manageable, but a federal tax lien can make that harder because it affects creditor priority.

Lien subordination does not remove the IRS lien.

Instead, the IRS may agree to let another creditor move ahead of its lien in priority.

In the right situation, that may help a refinance move forward.

But the IRS has to approve the subordination request, and the lender still has to approve the refinance.

IRS guidance recommends submitting a subordination application at least 45 days before the transaction date when the certificate will be needed.

See IRS Publication 784 for lien subordination applications.

5. Let IRSProb Deal With the IRS While You Deal With the Mortgage

A homeowner facing foreclosure may already be dealing with loss-mitigation paperwork, notices, and deadlines.

Then the IRS sends another letter.

IRSProb can focus on the tax side by reviewing records, communicating with the IRS, evaluating collection options, and addressing lien issues.

Meanwhile, you can keep working with your mortgage servicer, housing counselor, foreclosure attorney, or other professionals dealing with the mortgage.

Can IRSProb Stop the Bank From Foreclosing?

IRSProb cannot guarantee that your lender or mortgage servicer will stop or delay foreclosure.

Starting an IRS installment agreement, requesting CNC status, submitting an Offer in Compromise, or applying for lien relief does not automatically stop a bank foreclosure.

The foreclosure process depends on your mortgage, lender or servicer, and applicable law.

What IRSProb can do is look at whether the IRS problem is making the foreclosure situation worse.

A federal tax lien may be blocking a refinance, complicating a sale, or adding pressure to an already tight budget.

Those are tax issues we can review.

What If the Foreclosure Sale Is Already Scheduled?

If there is already a sale date, deal with the mortgage immediately.

Find out exactly when the sale is scheduled and contact your mortgage servicer as soon as possible.

Ask whether any loss-mitigation options remain available.

The Consumer Financial Protection Bureau provides information about foreclosure assistance options.

A HUD-approved housing counselor may also help you understand foreclosure-prevention options.

If legal papers have been served or the sale is close, speaking with a qualified foreclosure attorney may be appropriate.

If there is an IRS lien or active collection, address that at the same time.

Starting an IRS resolution process does not automatically pause the bank's foreclosure.

What Happens to an IRS Lien If the Bank Forecloses?

A foreclosure does not automatically make a federal tax lien disappear in every situation.

For certain nonjudicial foreclosure sales, if the federal tax lien was filed more than 30 days before the sale, the foreclosing party generally must give the IRS proper notice at least 25 days before the sale for the sale to discharge the federal lien.

If proper notice is not given, the lien may remain attached to the property.

The IRS may also have a 120-day right of redemption after certain foreclosure sales.

What If the IRS Is the One Threatening Your Home?

That is different from a bank foreclosure.

A federal tax lien alone does not mean the IRS is about to seize your house.

If the IRS itself is trying to take your principal residence through an administrative seizure, special protections apply.

The IRS generally must first obtain federal district court approval and show that required procedures were followed and that no reasonable collection alternative exists.

The government can also pursue a separate judicial action to foreclose a federal tax lien.

That is a different legal process.

If you receive notices showing that the IRS is moving toward seizure or a forced sale of your residence, that is a serious collection matter and should be addressed promptly.

What If You Cannot Afford the Mortgage and the IRS?

For many homeowners, this is the real problem.

There simply is not enough money each month to pay the mortgage, the IRS, and normal household expenses.

The answer is not to randomly choose which bill to ignore.

The IRS considers financial information when reviewing certain collection options.

That may include income, necessary living expenses, assets, bank accounts, and home equity.

Facing foreclosure does not automatically qualify you for CNC, an Offer in Compromise, or a lower IRS payment.

But your financial condition matters.

The goal is to understand what you can realistically afford before agreeing to an IRS payment that makes the rest of the situation worse.

What Should You Do Now?

Start by getting the facts.

Find out exactly what is happening with your mortgage.

• Is there a foreclosure sale date?
• Are you still in loss mitigation?
• What has the mortgage servicer told you?

Then look at the IRS side.

• How much do you owe?
• Has a federal tax lien been filed?
• Is the IRS actively collecting?
• Is an IRS payment hurting your cash flow?
• Is the lien interfering with a sale or refinance?

Once those questions are answered, the situation becomes clearer.

You may still have difficult decisions to make, but at least they are based on current facts instead of old letters or assumptions.

Frequently Asked Questions

Final Thoughts

If your house is at risk and you owe the IRS, it can feel like one big problem.

It is usually two problems: the mortgage and the tax debt.

They may affect each other, but they need to be handled differently.

IRSProb cannot promise to save your home or force your lender to stop foreclosure.

What we can do is take a serious look at the IRS side.

Is there a payment arrangement that needs to be changed? Does financial hardship need to be reviewed? Is a tax lien making a sale or refinance harder? Would lien discharge or subordination make sense? Is another legitimate IRS resolution option available?

Those are questions we can help answer.

The sooner you know where you stand with both the lender and the IRS, the better chance you have of making a decision while you still have options.

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