Any input on IRS liens as a roadblock?

Matt Matich

Jun 10 • General discussion

I’m looking at a dirty-title file where IRS liens may be the main roadblock.

Basic facts:

As is value is roughly $110k

IRS liens appear to be around $38k+

There are also heirs, legal/title costs, closing costs, and other deal expenses.

After rough math, the deal may not have enough spread unless the IRS issue can be handled cleanly.

From what I understand using AI, there are a few possible paths:

Certificate of Discharge — remove the IRS lien from this specific property so it can sell, while the taxpayer’s IRS debt may still remain.
Lien release / expiration — if the collection period expired or the IRS failed to refile before the “Last Day for Refiling.” I think they expire in 10 years unless renewed.
Payoff through closing — assume the IRS gets paid what its lien position is worth.
Offer in Compromise — possible in theory, but likely slower and taxpayer/estate-specific.

My main question for people who have actually worked these: How do you handle IRS liens operationally when underwriting dirty-title deals?

Do you usually:

treat the IRS amount as a hard payoff at closing.
try for a discharge from the specific property or an offer in compromise.
wait for expiration/self-release
or just kill the file unless the spread is still strong after paying the IRS?

I am not assuming the IRS “settles cheap.” I’m trying to understand what the practical playbook is so I don’t waste time on files where the IRS lien kills the economics.

6 comments

Any input on IRS liens as a roadblock?