Tax lien in Florida?

Question

My father has a large tax lien on his house about 80,000. My mother and him hold title to the house. He has been trying to settle but it is going slow. I am hearing conflicted information about taxes and liens. Is it true that the IRS can come in an force you to sell the house even though my mother is innocent in the matter? Is there such as thing as an innocent spouse? What can be done to resolve this issue?

Answer 1

Florida is a homestead state. If this is there homestead property they are protected. If this is not, its a goner.

Florida if you didn't know is where all the people they owe hugh amounts of money (IE OJ Simpson) Your homestead property is protected no matter how large it is.

Answer 2

Assuming that your parents filed a joint income tax return, the prospects for your mother's claim of Innocent Spouse are very poor. That's generally reserved for situations where one spouse owns a business and could have no reasonable way to know what the finances of the business were. Other situations can apply, such as long-term illness during the period where a joint return was filed or dimished capacity.

If your parents filed separate returns, your mother can possibly protect her equity in the house. That doesn't necessarily mean that she'll get to keep the house, but she may get her share of the equity if a tax sale is forced.

The IRS can force a tax sale but they generally don't do that. They'll wait patiently (while penalties and interest continue to accure) until there is a change of ownership and will get their money automatically at closing.

Should your parents pass on before the debt is cleared, the IRS will take their share out of the estate. If the home is the only asset, the executor will be forced to sell it and clear any debts of the estate (taxes first) before any remainder can be divided amoung the beneficiaries.

If your mother feels that she might qualify for Innocent Spouse status she should probably consult with a tax attorney or CPA who specialize in that type of case. If the application isn't carefully prepared it will be denied and she'll lose out completely.

Here's a link to the IRS site and a decision matrix that she can use to help her determine if she might be successful in her claim: http://www.irs.gov/individuals/article/0,,id=96786,00.html

Time is of the essense here as there is only a 2 year window for her to apply from the time the IRS first started collection efforts.

Note to all: I privately informed the first poster of her error in stating that there was no such thing as an Innocent Spouse. She provided me with the following reply, which I normally would not post but she decided to block replies so I will post it here for all to see:

From: redvelvetflames4ever

"Look I am not your attorney and I do this on my spare time. Your parents were the idiots to get themselves screwed up with an 80K debt. That doesn't happen overnight. You reap what you sow. If you were looking for legal advice regarding the entire definition of "innocent spouse" pay me my wage of 250.00 an hour. Bunch of idiots on this thing looking for free advice and then having the ******* balls to email and insult you!"

Just so you know what kind of idiots you have posting replies here sometimes. She wasn't even bright enough to note who had e-mailed her and that it wasn't the person who posted the question in the first place. What a loser!

Answer 3

No such thing as "innocent spouse" although your story is not uncommon (wife being in the dark about financial matters.) Actually the IRS can advise the state of Florida to put the home on foreclosure per them so it can be sold to the general public to collect on the 80K debt. It is beyond rare the IRS will settle for a lesser amount especially if the property and it's location has value. Unless your father has equity on the house to take out a second mortgage there really isn't much he can do unless he secures a tax attorney who specializes in these matters to negotiate on your parents behalf.

Answer 4

The rules for Innocent Spouse relief under Internal Revenue Code Sec. 6615 are not simple enough to explain here, but it might be to Mom's benefit to bring her facts to a tax professional who is very familiar with the rules. In fact she might qualify, depending on the facts & circumstances.