If your business is planning to sell a property or piece of real estate, then it’s important to make sure you are up to date with your taxes. Otherwise, you could waste time and effort putting it on the market and lining up a buyer only to find you cannot go ahead with the sale.
Here is why this might happen.
The IRS could place a federal tax lien
If you do not pay your taxes when they are due, the IRS will issue a Notice and Demand for Payment. If you still do not pay up after receiving this, the IRS may place a federal tax lien on your real estate. This means you will not be permitted to sell the property until you get the lien removed. To do that, you’ll need to pay the taxes you owe and any interest due on them.
The lien will be noted on public records, meaning you would struggle to get new loans, as creditors will see this information. The lien also puts the IRS ahead of them in any attempt to claim assets against the money you owe them, so creditors won’t have the security they’d normally have and want when lending money.
If you are a sole proprietor, the lien could be put on your personal real estate, making it difficult to even sell your house. Bankruptcy likely would not help you either, as tax debt and federal liens are typically not cleared in bankruptcy..
If the IRS places a federal tax lien on your property, the best thing to do is pay up promptly. But what if selling the piece of real estate with the lien on it is your only viable way to pay the taxes you owe? In this case, having legal guidance can help you negotiate with the IRS to work out a solution.