The IRS is trying to help certain situations for taxpayers who need to refinance but the federal tax lien has hurt their chances. The IRS is aware of these situations and are trying to help. Please read the following from the Internal Revenue Service and our comments.
The IRS  needs to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today.  In a small but potentially important way for some families, the IRS is trying very hard to help.  The IRS will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.  For taxpayers who are trying to refinance their mortgage, the existence of a tax lien generally means that the new lender will not go through with the refinancing.  But in a lot of cases, the IRS will decide to make the federal tax lien secondary to another lien, such as a new mortgage.
The IRS is ready to help taxpayers who find themselves in these situations.  Where we can subordinate our lien to help a family win that new refinance mortgage, that may mean that they can stay in their homes.  Some taxpayers are also trying to sell their homes.  Often, they have no equity in the home because it has gone down in value.  Again, the tax lien makes it unlikely that a new buyer could get a mortgage on the property.  In these cases, we can discharge the tax lien so that the sale can proceed.
I want to stress that the IRS is doing whatever it can under the constraints of the law and common sense to avoid getting in the way of people trying to save  or sell their homes.  It currently takes about thirty days to apply for and receive either a discharge or a subordination of a federal tax lien.  The IRS is committed to putting in place whatever resources are needed to speed this process up as much as possible, so that we will not be the party delaying a closing or a settlement.  So, the question is, will this help a lot of families?  I’m not in a position to predict how many families this will affect or how many families will take advantage of these new, expedited IRS procedures, but I can say that there are more than a million federal tax liens outstanding today, tied to both real and personal property.
Let me just give you a little more information on how it works.  A taxpayer or their representative, such as their lender, may request that the IRS make a tax lien secondary to the lien by a lending institution that is refinancing or restructuring a loan.  A taxpayer may also request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien in some cases.
Taxpayers can find all the information they need at www.irs.gov.  You know, I think the main message and what we want to let people know is that, as commissioner, I’ve given instructions to all IRS personnel to work with taxpayers on any mortgage-related issue.  We’ve shifted resources to expedite our subordination process.  We’re gonna go the extra mile ’cause we’re very sensitive that this is an important issue the taxpayers are gonna be working through in these difficult economic times.
Even though the IRS has had this procedure in place for many years, the process is longer than they lead you on to believe and the procedure is longer than you think. Generally there are only 2 staff people working these cases in a district. We have the speed and the contact to help navigate you through this process.  We have the necessary forms to expedite you through process and get you relief as soon as possible.