That most beloved of federal institutions, the IRS, has decided to temporarily alter their policies regarding unpaid taxes so homeowners wishing to refinance or sell a home can do so without a tax lien torpedoing the deal. From an L.A. Times story:
The plan announced by IRS Commissioner Doug Shulman would speed up a process in which financially distressed homeowners may request that a federal tax lien be made secondary to liens by the lending institution that is refinancing or restructuring a loan.
Taxpayers will also be able to ask the IRS to discharge, or remove, its claim to a property in certain circumstances when the property is being sold for less than the amount of the mortgage lien.
"We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today," Shulman said, stressing that "we don't want the IRS to be a barrier to people saving or selling their homes."
He said the program would focus on people who ordinarily pay their taxes in full but "because of these extraordinary times are getting behind in their tax payments."
Click here for full story.
Thursday, December 18, 2008
IRS to relax rules on tax liens to assist troubled homeowners
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I would like to bring a very important bit of information to your attention that relates to this economic crisis that was overlooked until now.
On Sunday, 12/14/08, CBS 60 Minutes aired a segment "The Mortgage Meltdown".
Scott Pelley's piece on the 2nd Wave of Foreclosures overlooked a critical fact.
The segment missed the fact that this next wave of Foreclosures in 2009 Will Take Self-Employed and Smaller Businesses who have these TOXIC mortgages. In fact, ALT-A, Option ARMS, Interest-Only, the TOXIC Mortgages that are considered the "Troubled" assets in TARP were specifically marketed to the self-employed who fell prey to them.
The upcoming defaults on these risky "Toxic Mortgages" will result in an increase in foreclosures. But worse, once these small businesses fail, the resulting loss of jobs will cause millions to add to the ranks of the unemployed. Note that self-employed business owners (16.2 million according to the SBA) employ between 1-10 employees.
An NASE survey at www.nase.org , was the first to provide compelling evidence of small business involvement in the upcoming toxic mortgage crisis. The survey was created by Prof. Samuel D. Bornstein and Jung I. Song, CPA of BornsteinSong Consultants in Oakhurst,NJ,and was conducted by the National Association for the Self-Employed (NASE) which issued a Press Release on November 21, 2008.
According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.
These small business owners will be at-risk of payment shock and default as their monthly mortgage payments skyrocket. Small business owners were especially targeted for these Alt-A loans which required little or no documentation of income which appealed to many small business owners who previously were unable to qualify.
The resulting defaults will be the cause of the upcoming second tsunami wave of foreclosures that will dwarf the subprime crisis and will take many homeowners and small business owners.
I would be happy to discuss the implications of the NASE Survey, since I created it and NASE ran it to its national membership (250,000). See the NASE website www.nase.org under NASE NEWS for the Toxic Mortgage Survey.
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