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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  JD, MBA
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re Florida - Question concerns options in relation to the

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re Florida - Question concerns options in relation to the following scenario. Example: Florida Family-A has a first mortgage on a single-family home (only property they own) and mortgage is nearly paid in full. Down the road, Family- A obtained a second mortgage on the home that is still being paid down. There is no foreclosure – the home is not under water (all payments due on both mortgages are current). Accountant informs Family A that back taxes are owed. Are there any options/provisions at all for Family A to negotiate with IRS i.e. perhaps to agree to sell the home now, whereby from the home-sale the remaining amount of first mortgage would be satisfied and IRS would settle for the remaining amount of proceeds, or settle with the second lender in some manner? Or a waiver of the second mortgage? As there would not be enough proceeds from home-sale to satisfy all three amounts. What is your view of Family-A’s best options to consider for relief, particularly in terms of the tax matter?
Hello and thank you for allowing me the opportunity to assist you.

Yes, a settlement is certainly possible. The IRS does settle past due tax bills. It's called an offer in compromise, and it is generally granted when there is no reasonable way for the IRS to collect more. In your case, if you have equity in your home, and that is your only asset, then it's possible that the IRS will settle for the equity after the first and second mortgages are paid off from a sale. However, it is unlikely that the IRS will settle before the house is sold. You'd need to sell first, get the remaining cash, and make that offer.

You can read about an offer in compromise HERE.

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