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Income Taxes Owed Must Be Paid; Or Payment Plan Set Up

Income Taxes Owed Must Be Paid; Or Payment Plan Set UpWe have to review every borrower’s tax return. And, every time we see a tax liability owed on a tax return, we need proof (a canceled check, a receipt from the IRS, or a bank statement reflecting the withdrawal of the payment) that it has been paid.

If it has not been paid, the borrower either has to pay it prior to close of escrow, or he has to set up a payment plan with the IRS or the state tax authority.

Last minute payment plans often cause delays, however. FHA in particular will not allow loans to close with a tax payment plan in place unless there is a three-month history of payments.

If a formal Tax Lien has been filed, that lien will have to be paid in full and cleared no matter what, prior to close, even if a payment plan is in place.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167