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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2863
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I HAVE A LIEN AGAINST MY 2000 CHEVROLET BLAZER BY THE IRS. I

Customer Question

I HAVE A LIEN AGAINST MY 2000 CHEVROLET BLAZER BY THE IRS. I OWE THE IRS AT LEAST
$25,000. I AM SELLING THE BLAZER FOR $350. DO I SEND THE IRS THE $350.00? DO I HAVE TO REPAY THE $25,000. IN ORDER TO SELL MY VEHICLE?
$
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

A lien on a vehicle is covered under IRC 6323(b)(2)

You do not have to pay the $25000 prior to selling but you do need to turn over the proceeds to the IRS.

IRC 6323(b)(2)

(2) Motor vehicles

With respect to a motor vehicle (as defined in subsection (h)(3)), as against a purchaser of such motor vehicle, if—

(A) at the time of the purchase such purchaser did not have actual notice or knowledge of the existence of such lien, and

(B) before the purchaser obtains such notice or knowledge, he has acquired possession of such motor vehicle and has not thereafter relinquished possession of such motor vehicle to the seller or his agent.

It protects the purchaser from having the lien follow the vehicle. This is true as long as the buyer is not in a position to have known about the lien. This is important because if property transfers to the buyer with the tax lien attached to it, the IRS may have the right to seize the property from the buyer. So under IRC 6323(b)(2) the buyer is protected.

Here is a link to the full IRC about this subject

https://www.law.cornell.edu/uscode/text/26/6323

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Customer: replied 1 year ago.
IN ORDER FOR THE LIEN TO BE LIFTED AND THE BUYER TO BE ASSURED THERE IS NO LIEN, HOW DO I GO ABOUT THIS PROCEDURE?
Expert:  Barbara replied 1 year ago.

Different expert here - my name is ***** ***** please allow me to provide you with the information which you requested in your latest response.

You will need to submit an Application for Certificate of Discharge of Federal Tax Lien. The IRS is likely to discharge the asset from the lien (allow the buyer to take ownership free and clear of the tax lien) if the asset is sold for fair market value (or close to fair market value) and the proceeds of the sale of the asset are used to pay down the IRS taxes owed.

The following link contains excellent, detailed information as well as a link to the Application:

http://taxfortress.com/how-to-sell-an-asset-that-is-subject-to-a-federal-tax-lien/

Please let me know if you require further information or clarification.

Thank you and best regards,

Barb