The IRS - Making a Check and Listing It Twice

[MineralMan]

24. Many years ago, I had to set up a payment plan with the IRS.

We had earned a bunch of money one year from a contract that was unexpected, and didn't set aside enough of it for taxes. So, we set up a payment plan to pay off the IRS. It was all paid off in six months. What we didn't know was that the IRS doesn't release the lien automatically and record the release once the amount is paid off. You have to specifically request that the lien be released.

Jump ahead several years, and we were refinancing our mortgage. A week before the closing of the refi, I was informed by the lender that it would not close due to that outstanding IRS lien. I asked them to put the closing off a month, and I would get the lien cleared.

Well, that was an adventure. I did what was required and sent the forms and copies of every cancelled check, and mailed it to the address I had been given for the IRS lien office in Fresno, CA that handled such requests. I got mail back saying the request was being processed, and then nothing after that. A couple of weeks before the refi was to close, I still had not gotten any word on this.

So, after considerable research, I found a phone number for that Fresno office and called. A pleasant-sounding woman answered and I explained my situation. She said she'd call back. She did, a couple of hours later. "I have your application here, but it won't be processed for another couple of weeks. Clearly, though, you have satisfied the lien conditions."

I thought quickly, and damped down my growing anger about this whole thing. I shifted into my appeasement mode, thanked her profusely for her help, and asked if there wasn't some way to move my application up in the pile, since much was riding on the clearance of that lien. I put as big a smile in my voice as I was capable of. It worked. She said, "Well, yes, I could do that for you. But, the release of the lien still has to be recorded at your County Clerk's office."

I wondered aloud if she could possibly arrange to fax the lien release to the County Clerk's office. She responded that, yes, she could, but didn't have the fax number. But I had the fax number, so I gave it to her. The IRS woman said, "Well, then I'll expedite the process for you and get that lien release faxed to that number today. " I thanked her profusely, but did ask for her desk phone extension number, which she gave me.

Then, I called the County Clerk's office and talked to a person there I had dealt with already. I alerted that person that a lien release from the IRS would soon be faxed to their office and asked if they could record it immediately and fax a copy of it to the lender, and a copy to my fax machine. Once again, I was in my most sincerely friendly mode of conversation. "Sure, I can do that for you. I'll watch for that fax."

And sure enough, later that day, I got the lien release document faxed to me by the County Clerk's office, with a note saying that it had been faxed to the lender, as well. I called the lender's representative to alert him about the fax. He checked. It had come in. The refi closed as scheduled.

But, here's the thing: That lien release should have been issued and recorded as soon as I had satisfied the terms of the lien by paying off the amount as agreed. That the IRS doesn't do that automatically is really shocking. I wonder how many times a home sale or refi has fallen through because an old IRS lien had not been released. I was able to maneuver through the bureaucracy successfully, but many people would not have been able to do that.