Webinar Transcript (6/9/2026): Don’t Lien on Me: How to Discharge IRS and NYS Tax Liens
Host: Jonathan I. Shenkman, President & Chief Investment Officer of ParkBridge Wealth Management (Contact: jonathan@parkbridgewealth.com)
Speaker: Scott Kestenbaum, Partner, Kestenbaum & Mark LLP (Contact: scott@kmtaxlaw.com) AND Jill Monoson, Esq., Of Counsel, Kestenbaum & Mark LLP (Contact: jmonoson@kmtaxlaw.com)
Jonathan Shenkman: Good morning, and welcome to the Park Bridge Wealth Management Spring Webinar Series. This program is entitled, Don't Lean on Me.
2
00:00:11.780 --> 00:00:36.269
Jonathan Shenkman: how to discharge IRS and New York State tax liens. And as always, my name is Jonathan Shankman. I'm the President, Chief Investment Officer of Park Bridge Wealth Management. In that role, I serve in a fiduciary capacity to help my clients achieve their financial objectives. The goal of my programs is to bring professionals together to help them better serve their clients, and this is done by educating attendees on the latest topics in wealth planning, and by encouraging collaboration between a client's attorney
3
00:00:36.270 --> 00:00:49.840
Jonathan Shenkman: CPA, and financial advisor where appropriate. My practice focuses on working with high-net-with families, businesses, and not-for-profits. I manage individual investment portfolios, trust accounts, corporate retirement plans, and endowments to help my clients achieve their financial goals.
4
00:00:49.850 --> 00:00:57.099
Jonathan Shenkman: In addition to the 20 or so events I run every year, I also do a fair amount of writing on the topics of investing and financial planning.
5
00:00:57.280 --> 00:01:14.059
Jonathan Shenkman: And you can read my work in a variety of periodicals, including Barron, CNBC, Forbes, Kiplinger, The Wall Street Journal, and Trust and Estates magazine, to name just a few. You can see all my work on my website at parkbridgewealth.com forward slash articles, or by following me on social media at Jonathan on Money.
6
00:01:14.060 --> 00:01:33.789
Jonathan Shenkman: Additionally, you can check out my weekly podcast, which is also called Jonathan on Money, and you can listen to that on Apple, Spotify, or wherever you get your podcasts. Finally, I published my first book, These for Diversification, The ABCs of Personal Finance, which can now be purchased on Amazon or at jonathanOnMoney.com, and it's a great way to support these programs.
7
00:01:33.840 --> 00:01:57.829
Jonathan Shenkman: Today, we're privileged to hear from Scott Kestenbaum and Joe Monesen from the law firm Kestenbaum Mark, based in Great Neck, New York. Just by way of background, Scott's a partner at the firm where he represents corporations, individuals, and estates in complex domestic and international tax matters, including civil and criminal controversies before the IRS and state authorities. He also advises clients on residential and commercial real estate transactions.
8
00:01:57.830 --> 00:02:09.420
Jonathan Shenkman: Recognized as Super Lawyer Rising Star from 2018 to 2025, he serves in leadership roles within the Nassau County Bar Association and the ABA, and frequently lectures on tax controversy issues.
9
00:02:09.759 --> 00:02:33.299
Jonathan Shenkman: Jill is counsel at Kesten Bauman Mark, and an accredited estate planner. She serves as acting Villa Justice in Kensington and is a member of the Estate Planning Council of Long Island and the New York State Magistrates Association. And Jill previously practiced at large New York City law firms. Her practice focused on estate and trust administration, estate planning, and residential real estate transactions. And today.
10
00:02:33.310 --> 00:02:42.520
Jonathan Shenkman: Scott and Joe will be speaking on Don't Lean On Me, How to Discharge IRS and New York State Tax Liens, and with that introduction, I'll now turn the program over to Scott and Joe.
11
00:02:43.330 --> 00:02:50.569
Scott Kestenbaum: Thank you very much, Jonathan, and thank you everybody for listening in today. And for all the Knicks fans out there.
12
00:02:50.570 --> 00:03:10.960
Scott Kestenbaum: Really unfortunate loss last night. I know probably some of us are tired, but, you know, we have a few games left, so, go Knicks. Today's focus, as Jonathan mentioned, is on how federal and New York State tax liens arise, how long they last, and most importantly, how can we clear them when your client needs to close on a real estate transaction.
13
00:03:10.960 --> 00:03:22.620
Scott Kestenbaum: So we'll work through the IRS discharge process, the New York State release process, and then go through the release of the estate tax liens, and how to deal with these issues when they show up in a title report.
14
00:03:22.960 --> 00:03:44.880
Scott Kestenbaum: Okay, so, I will mention before we start, the slides are, are available for you to review. We will not touch on every item in the slides, as there's more information than we have time, but we'll try to highlight the very important points, and certainly, if you have questions about other points or other items that we discussed today, you can feel free to reach out to me or Jill.
15
00:03:45.560 --> 00:04:04.349
Scott Kestenbaum: So the first is, how does a tax liability arise? How do we even, worry about whether there's a lien? Well, in order for there to be tax collection, the tax has to be assessed. The simplest way for tax to be assessed is through what's called self-assessment. Self-assessment is when a taxpayer files a tax return, and that's when the IRS records the liability.
16
00:04:04.350 --> 00:04:15.640
Scott Kestenbaum: Other ways that tax can be assessed are through a traditional audit. You know, the IRS generally has 3 years to audit you. Through what are called substitute for returns. This is an important note for clients.
17
00:04:15.850 --> 00:04:27.490
Scott Kestenbaum: The IRS does have a matching program, where if you file a return and you report information from third parties, the IRS will match it up to third-party reporting information to make sure that everything is on the return.
18
00:04:27.570 --> 00:04:43.739
Scott Kestenbaum: If there's no return, then the IRS will take all the third-party information and will prepare a substitute for return, which will act as your tax return unless you file one. Okay, so it's important that people understand that all third-party information does get included on a tax return.
19
00:04:44.150 --> 00:05:03.320
Scott Kestenbaum: There is also Jeopardy assessments, where, if the IRS believes that… that there is a delay, or somebody tries to flee the country, they immediately assess the tax. And then there's something called trust fund recovery penalties, which we can discuss in a different presentation, but is a penalty where if a business has a tax liability.
20
00:05:03.450 --> 00:05:15.519
Scott Kestenbaum: and it's not paid, the IRS has the right to then collect a portion of that tax, which represents the… a portion of the payroll tax, the federal income tax withheld, plus half of FICA and Medicare.
21
00:05:15.690 --> 00:05:23.100
Scott Kestenbaum: Okay? As mentioned in the last slide, there is, there's a 3-year statute of limitations for
22
00:05:23.320 --> 00:05:39.640
Scott Kestenbaum: auditing a tax return. So generally, you file your tax return, let's use, you know, 2025, it gets filed in either April or October of 26. The IRS then has 3 years to review that return and make a determination as to whether that return's correct. If you file your return late.
23
00:05:39.640 --> 00:05:44.439
Scott Kestenbaum: then the IRS has 3 years from the filing date. It's whichever is later, okay?
24
00:05:45.020 --> 00:06:00.460
Scott Kestenbaum: The IRS can also extend the statute, but it's important, and I highlighted this here in the slide, both the IRS and the taxpayer have to agree before the statute expires, okay? And that's important because there's something called a Form 872, and there are various versions of that.
25
00:06:00.460 --> 00:06:06.099
Scott Kestenbaum: That have to be signed by both the taxpayer and the government in order to agree to extend the statute.
26
00:06:07.740 --> 00:06:24.540
Scott Kestenbaum: There are also two main ways that statute of limitations can be extended, okay? There's a 20… if there's more than a 25% omission of income on your tax return, then the tax can be extended, or the time period for auditing the return can be extended.
27
00:06:24.780 --> 00:06:28.000
Scott Kestenbaum: And, it goes to 6 years instead of 3 years.
28
00:06:28.000 --> 00:06:47.260
Scott Kestenbaum: If there is civil tax fraud on the return, then there is no statute of limitations, okay? We have a case right now where there is a tax liability from the early 2000s. The government… we are in tax court now, the government is alleging tax fraud, okay? They have gone back 25 years to… in order to assess tax based on
29
00:06:47.570 --> 00:07:06.549
Scott Kestenbaum: proving fraud, and the government does have the burden to prove that fraud, but it can open up any year. So it's really important that if there is any inkling of fraud, that there's a discussion with an attorney or other professional to understand if it's worthwhile to amend the returns in order to protect the taxpayer from being audited.
30
00:07:08.440 --> 00:07:20.389
Scott Kestenbaum: There's also something called the Notice of Deficiency, and a notice of deficiency is where if the IRS determines that there's deficiency in tax, they have to notify the taxpayer, and they have to give the taxpayer the opportunity to then challenge that tax.
31
00:07:20.390 --> 00:07:32.180
Scott Kestenbaum: This is the typical case of when a taxpayer would go to tax court, for example, because when you file a petition in response to the notice of deficiency, then you have the right to then challenge it in tax court.
32
00:07:32.600 --> 00:07:35.230
Scott Kestenbaum: So that's what this slide focuses on.
33
00:07:36.450 --> 00:07:53.189
Scott Kestenbaum: Now, collection follows the assessment, okay? So, this is sort of the beginning of the process that I'm going to speak about as we relate to releases of lien, okay? Once the tax is assessed, and the taxpayer doesn't pay that liability back, that could include tax, penalty, and interest.
34
00:07:53.190 --> 00:07:58.520
Scott Kestenbaum: then the IRS will begin the collection process. They will start to collect from the taxpayer, okay?
35
00:07:58.700 --> 00:08:14.580
Scott Kestenbaum: So, there's really two main ways that they collect. They collect through liens, and they collect through levies, okay? Lean is under Section 6321, okay? And a lien arises at the time of the assessment, and continues until the amount is satisfied or unenforceable.
36
00:08:15.050 --> 00:08:21.639
Scott Kestenbaum: This is important for a few reasons, and I want to highlight some important factors. The first thing is, if you see a title report.
37
00:08:21.750 --> 00:08:29.249
Scott Kestenbaum: Okay, as a real estate lawyer, and you see an IRS lien, and the lien says that the taxpayer owes $24,321,
38
00:08:29.360 --> 00:08:35.710
Scott Kestenbaum: Almost 100% of the time, it's inaccurate, okay? That is not the amount that the taxpayer generally owes. Why?
39
00:08:36.090 --> 00:08:45.219
Scott Kestenbaum: The reason behind that is, the lien, when it's filed, lists the amount that was owed as of that specific day of recording, okay?
40
00:08:45.220 --> 00:08:50.439
Scott Kestenbaum: The interest and penalties continue to accrue on that amount until the balance is full paid.
41
00:08:50.440 --> 00:09:15.379
Scott Kestenbaum: Okay? So, a taxpayer will often call me and say, okay, I owe $25,000, that's what it says on the lien, I want to pay it. But it's not accurate. They may owe $40,000 or $50,000. The other is just to mention a few collateral sanctions. So these are other ways, in addition to liens, that the IRS can collect. One is in New York, for example, they will suspend your driver's license if you owe more than $10,000 to the New York State Department of Taxation and Finance, and you don't
42
00:09:15.380 --> 00:09:31.460
Scott Kestenbaum: have an agreement in place, and if you owe more than $66,000 now to the IRS, they can certify that your debt is… they can revoke your passport by certifying your passport, okay, and stating that they will not issue you a new passport.
43
00:09:31.720 --> 00:09:41.929
Scott Kestenbaum: if you do not get into some form of an agreement or collection alternative with the IRS. Okay, so the example I often get here is someone will call me and say.
44
00:09:42.170 --> 00:09:56.800
Scott Kestenbaum: well, I, you know, I owe taxes to the IRS, but my passport has 8 years left, okay? If your passport is not… does not need to be renewed for 8 years, the IRS's certification really has no impact on you.
45
00:09:56.800 --> 00:10:10.419
Scott Kestenbaum: Okay, so now let's focus on what happens now when there's a lien, okay? IRS files a lien, and you want to sell a piece of property, and you need to release that lien in order to sell the property, because you do not want the buyer to get stuck with that lien.
46
00:10:10.440 --> 00:10:22.670
Scott Kestenbaum: So what do you do? Well, there's an IRS form, okay? It's called a 14135, and you make the submission to the IRS, along with a copy of the contract of sale, the title report.
47
00:10:22.790 --> 00:10:32.810
Scott Kestenbaum: An appraisal and an informal valuation. Why do you need both? The IRS wants two forms to prove that the amount you're selling for is correct.
48
00:10:32.920 --> 00:10:52.410
Scott Kestenbaum: They don't want you selling the property for $100,000 if it's worth a million dollars, okay? That's an exaggerated example, but all that to show that I have had cases where the IRS will disagree with the valuation if the amount in the valuation seems way off from what they're seeing online, for example, with the approximate value of the property.
49
00:10:52.410 --> 00:11:01.620
Scott Kestenbaum: So what you do is you submit all of these documents to the Internal Revenue Service, and you explain to them through a draft closing statement, either we draft it.
50
00:11:01.620 --> 00:11:06.230
Scott Kestenbaum: As the tax lawyer, or that we work with the real estate attorney to draft.
51
00:11:06.410 --> 00:11:21.960
Scott Kestenbaum: and establish what the net proceeds are going to be from the sale. So after you pay your typical closing costs, you pay your broker fee, and you pay your transfer taxes, and you pay any title fees, you're gonna have some amount left, okay? That amount left is the amount you can offer towards the lien.
52
00:11:22.110 --> 00:11:42.749
Scott Kestenbaum: Now, the most important point here, because I get this all the time, is, what if there's not sufficient net proceeds to pay off the debt? It's okay, you can still get the lien released. And the reason is, they don't want the buyer to get stuck with the seller's debt, okay? So, as long as you prove to the IRS that you have given them the maximum amount of money from the sale.
53
00:11:42.750 --> 00:11:56.099
Scott Kestenbaum: They will release the lien from that specific property. That will not release the debt, meaning if you still owe another $100,000, it doesn't go away, okay? But at least it makes it possible for you to sell the property and move forward.
54
00:11:56.100 --> 00:11:59.960
Scott Kestenbaum: Okay, the typical process is you send in all the documents listed here.
55
00:12:00.200 --> 00:12:18.190
Scott Kestenbaum: The case gets assigned to what's called an advisory agent. That advisory agent will then issue what's called a conditional commitment letter that looks something like what you'll see on the screen here, and that tells you that you then have 30 days from the date of the commitment letter to close, okay? After those 30 days.
56
00:12:18.660 --> 00:12:38.149
Scott Kestenbaum: if you don't send in all the documents, the IRS can take back that commitment, okay? In almost every case, you can't predict the closing date to the exact day, so if you need extra time, the IRS will try to work with you, okay? But the idea here is, you've sent in all the documents, the IRS is comfortable that you have actually
57
00:12:38.150 --> 00:12:48.880
Scott Kestenbaum: provided them with the exact amount of net proceeds, or approximate amount that they're gonna receive, and they issued this commitment, okay? A lot of people will then say to me, well, the commitment is not a release.
58
00:12:48.980 --> 00:13:12.800
Scott Kestenbaum: Okay, and that's correct. It's not a release, but as long as you send right after the closing, or within 30 days after the closing, as long as you send all the documents needed to show that it matches exactly what you submitted, meaning that the net proceeds are what you said they were going to be, the liens get released. I've dealt with this in many different states, I recently just did one in Texas, it's no different from ones I've done in New York.
59
00:13:12.800 --> 00:13:15.050
Scott Kestenbaum: Okay, you have to get the title company comfortable.
60
00:13:15.140 --> 00:13:28.190
Scott Kestenbaum: that the liens are going to be released, and the IRS advisory agents are extremely friendly and accommodating, and they will sit down and speak to the title company, and explain to them how the commitment works, so that they understand what to do.
61
00:13:28.190 --> 00:13:38.389
Scott Kestenbaum: Okay? So, there's a special process for restitution. This is when there's a criminal tax issue, which we can talk about on a different day, but I wanted to just give you a tip about that.
62
00:13:38.740 --> 00:13:43.270
Scott Kestenbaum: Okay, New York State has a very similar process. It's called a tax warrant, not a tax lien.
63
00:13:43.340 --> 00:13:53.840
Scott Kestenbaum: But once there's a warrant filed, and here at the bottom, there's… there is a website you can go to to actually see if there's a warrant, you have a very similar process, okay? You submit the same documents.
64
00:13:53.840 --> 00:14:05.899
Scott Kestenbaum: to the New York State Release of Lien Unit, and you then have the opportunity to get the lien released, okay? They issue a similar commitment letter that's listed over here in this slide, and you then have 30 days to issue the release.
65
00:14:05.910 --> 00:14:16.089
Scott Kestenbaum: Okay, or excuse me, to issue the documents in order to obtain the release. Okay, so now what happens, and this is really the last point I'll make, what happens if there is a New York State
66
00:14:16.090 --> 00:14:40.319
Scott Kestenbaum: and IRS set of liens. Well, you have to go through the title report and understand the priority by which those liens were filed. It's first to file, okay? So, oftentimes, like, I have one going on that I submitted yesterday. There are IRS liens, and there are New York State liens behind those IRS liens, okay? So the first thing I have to do is submit my IRS application, okay? And I do that the day after the contract gets signed, because I don't want to slow down the
67
00:14:40.320 --> 00:14:41.030
Scott Kestenbaum: exposing.
68
00:14:41.030 --> 00:14:52.460
Scott Kestenbaum: Okay? After I receive my release from the IRS, I can submit my New York State release application and show them, by the way, New York, the IRS has already agreed to this commitment.
69
00:14:52.460 --> 00:15:01.529
Scott Kestenbaum: you now need to also agree, because if there are only, let's say, $5,000 of net proceeds to go to the IRS, there is zero to go to New York State.
70
00:15:01.530 --> 00:15:13.830
Scott Kestenbaum: And New York State now has that release from the IRS confirming that they've verified the information, and then New York State will follow suit. And sometimes it goes in the reverse order. It's not always IRS and then New York State, so you have to carefully review the title report.
71
00:15:13.980 --> 00:15:15.060
Scott Kestenbaum: Okay?
72
00:15:15.100 --> 00:15:34.690
Scott Kestenbaum: These are a few fact patterns we can go through, that I thought are just important to understand. So, in this particular case, the taxpayer and her husband purchased the home as tenants by the entirety, so joint tenants. The husband accrued liabilities under his business, so the wife was not held responsible for the tax liabilities.
73
00:15:34.720 --> 00:15:38.199
Scott Kestenbaum: And New York State then filed a tax warrant only against the husband.
74
00:15:38.470 --> 00:15:46.809
Scott Kestenbaum: But then the husband dies. What happens to… does the… does New York State grant a release of lien? Well, when it's joint tenants.
75
00:15:46.990 --> 00:15:48.799
Scott Kestenbaum: We're tenants by the entirety.
76
00:15:48.900 --> 00:16:01.180
Scott Kestenbaum: Each person owns a 100% undivided interest. So if one spouse dies, by operation of law, the other spouse, the surviving spouse, becomes the immediate owner of the property. So in this particular case.
77
00:16:01.180 --> 00:16:12.500
Scott Kestenbaum: Because the husband died, those liabilities belong to the husband. The wife, by operation of law, becomes the owner. New York State must release the lien without a single dollar paid towards the husband's tax debt.
78
00:16:12.500 --> 00:16:16.920
Scott Kestenbaum: Okay? Now, in the alternative, you have a husband and wife that purchase a home.
79
00:16:17.760 --> 00:16:22.469
Scott Kestenbaum: And there are liens filed for tax debt that's owed. And then they file for divorce.
80
00:16:22.970 --> 00:16:40.939
Scott Kestenbaum: And the stipulation says, and I've seen 100 plus of these, the husband, and I'm sorry to say that it generally is the husband, but the husband will agree that he will pay back every dollar of the tax liability, the wife has no liabilities, okay? And the issue with that is…
81
00:16:41.050 --> 00:16:47.140
Scott Kestenbaum: That even though the stipulation that's signed by the husband and wife says that the husband will pay.
82
00:16:47.210 --> 00:17:05.450
Scott Kestenbaum: Okay? The government did not sign on that document, okay? So that means that in this particular case, New York State comes before the divorce, okay? The government does not care that there is an agreement between the two parties, okay? Both parties are held jointly and severally responsible for the tax debt.
83
00:17:05.540 --> 00:17:27.010
Scott Kestenbaum: So you aren't able to just release the lien in exchange for, in exchange for the husband just agreeing to pay. Okay, so these are some unique issues. I'm going to turn it over to Jill now, but certainly if you have additional questions, or want to discuss any of these types of lien issues, I am more than available, and my contact information is in the slides.
84
00:17:30.050 --> 00:17:44.959
Scott Kestenbaum: Good morning, my name is Jill, and thank you, Scott, for that very interesting presentation, and I'm going to take you from the land of the living to the land of the dead, because, as we know, the IRS does not, or New York State does not end the conversation when people die.
85
00:17:45.110 --> 00:17:53.640
Scott Kestenbaum: So, thank you for being here so early in the morning, and if anyone like me watched the Knicks game, my apologies, and I know that we're all tired.
86
00:17:53.730 --> 00:18:04.320
Scott Kestenbaum: With that said, over the next 15 minutes or so, I'm gonna cover how the New York State and federal estate tax liens arise. So I'm gonna…
87
00:18:04.320 --> 00:18:15.069
Scott Kestenbaum: As you see, there are a lot of slides. I'm going to loosely follow my slide presentation, but I'm not gonna go through them in detail. If you have any questions, you can reach me or Scott offline.
88
00:18:15.190 --> 00:18:19.209
Scott Kestenbaum: So let me start by explaining that New York State and the IRS
89
00:18:19.390 --> 00:18:25.359
Scott Kestenbaum: both have liens, estate tax liens. I'm going to go through them one… first, New York State, then the IRS.
90
00:18:25.610 --> 00:18:32.370
Scott Kestenbaum: Most people on this call are probably New York State lawyers or accountants, so in my experience, it will be relevant to some of you.
91
00:18:32.600 --> 00:18:45.989
Scott Kestenbaum: So, as we know, most of the states typically contain some sort of real property, co-ops, etc, and in order to sell those properties, people need to address title issues. Title issues
92
00:18:45.990 --> 00:18:57.579
Scott Kestenbaum: always arise, and they always involve things like estate tax liens. So the important thing to pay attention, even before you start representing somebody, when they come to you and they say.
93
00:18:57.620 --> 00:19:08.620
Scott Kestenbaum: I want to sell my piece of property. Before you even look at the contract, before you even start chatting with the client, make sure that they have the authority to sell it. The first place to look at would be the
94
00:19:09.040 --> 00:19:26.089
Scott Kestenbaum: documents. The trust, the estate, if it's a trust, make sure they are the appointed trustee. If it's an estate, make sure that they are the appointed representative. You want to make sure that in the letters testamentary or the letters of administration, there are no limitations on what they can and cannot do.
95
00:19:26.090 --> 00:19:41.520
Scott Kestenbaum: So if you're the lawyer or the accountant, just make sure that you coordinate, and make sure that if you are not the lawyer handling the estate, that you get in touch with the lawyer who's handling the estate. Sometimes there's a lawyer handling the real estate, sometimes there's a lawyer handling the estate, sometimes they do both.
96
00:19:41.940 --> 00:19:48.309
Scott Kestenbaum: In any event, now you have concluded you have the authority to sell. Great. Now you have to deal with estate tax liens.
97
00:19:48.310 --> 00:20:10.839
Scott Kestenbaum: Estate tax liens apply and attach automatically. I have clients who come to me, they have a small estate, the only asset of the estate is a house, and they say, there's no lien. My father, my mother, my cousin, my brother always paid their taxes, there are no liens. Unfortunately, with estate tax liens, with respect to real estate, they are automatic. They attach to every piece of real property, every co-op.
98
00:20:10.840 --> 00:20:13.510
Scott Kestenbaum: The minute someone dies, the estate tax liens
99
00:20:13.600 --> 00:20:24.539
Scott Kestenbaum: applies. It attaches. There is one exception worth noting. If a decedent and their surviving spouse held the real property as joint tenants, and they are the only joint tenants, you don't need a release.
100
00:20:24.780 --> 00:20:26.490
Scott Kestenbaum: Okay, so I'm gonna…
101
00:20:26.580 --> 00:20:40.369
Scott Kestenbaum: quickly go through the requirements that you need for New York State. So, New York State, as I said, automatically places a lien on the property. The lien is effective as of the date of death, and what you need to do is you need to release the lien.
102
00:20:40.370 --> 00:20:53.589
Scott Kestenbaum: In order to release the lien, there are certain documents that need to be filed. So with New York State, the starting point is a form called the ET117. At the end of this slide presentation.
103
00:20:53.590 --> 00:20:55.919
Scott Kestenbaum: There are forms that are attached.
104
00:20:56.060 --> 00:21:03.569
Scott Kestenbaum: They are not filled out, but they are easy to understand, because there are instructions that come with them, which are also attached.
105
00:21:03.630 --> 00:21:13.919
Scott Kestenbaum: Note that, typically, the processing time is 3 to 4 minutes… sorry, 3 to 4 weeks. You do need to allow additional time for mailing.
106
00:21:13.920 --> 00:21:25.060
Scott Kestenbaum: And of course, the most important thing I tell everybody is make sure your forms are right the first time. Because if they're not right the first time, you will go to the back of the queue again, because New York State will keep asking you for additional documents.
107
00:21:25.340 --> 00:21:33.749
Scott Kestenbaum: So, as I said, the first form is an ET117. That ET117 has to be accompanied by one of these forms.
108
00:21:33.750 --> 00:21:46.650
Scott Kestenbaum: an ET30, an ET706, or an ET85. There's a chart that is going to be in the materials that you can refer to, and it's very clear in this chart, knowing which form you should use.
109
00:21:46.650 --> 00:22:00.749
Scott Kestenbaum: In addition to those forms, there's another form, it's not required, but I highly recommend that you get your clients to fill out a power of attorney. And it's a specific estate tax power of attorney, it's called an ET14.
110
00:22:00.750 --> 00:22:09.910
Scott Kestenbaum: So if your clients have income tax issues and they have a power of attorney on file, that's great, but this is a separate power of attorney specifically dealing with estate taxes.
111
00:22:09.910 --> 00:22:21.349
Scott Kestenbaum: So this is the chart, it's quite small, I'm not going to go through it in detail, but you will be able to see, it will tell you if you are this, example, if you're the appointed executor, and…
112
00:22:21.390 --> 00:22:35.880
Scott Kestenbaum: more… fewer than 9 months have passed, use this form, and etc, etc. But you make sure you fill out the right form, and go on the New York State website, and make sure you are filling out the most recent version of the form, because the versions change all the time.
113
00:22:36.460 --> 00:22:46.650
Scott Kestenbaum: So, each slide over here talks about the different forms. So, you want to file one of the forms if you are the appointed fiduciary, and fewer than 9 months have passed since date of death.
114
00:22:46.790 --> 00:23:04.729
Scott Kestenbaum: There are situations where an estate is not required to file a New York State Tax Return, and there are situations where there has no fiduciary been appointed yet. In those cases, there are… there is a form that you will file, and that form is the ET85,
115
00:23:04.730 --> 00:23:14.590
Scott Kestenbaum: and the New York State will process it, even if you have not been appointed yet. So, if a client comes to you and says, I'm selling the real estate, I haven't been appointed yet.
116
00:23:14.590 --> 00:23:27.840
Scott Kestenbaum: I say, okay, first of all, you can't enter into a contract for sale, but you can actually apply for the release of lien. You want to apply for the release of lien as early as possible, because it takes much longer than you think.
117
00:23:28.010 --> 00:23:41.810
Scott Kestenbaum: So, now you have filed your ET117, you have filed all your documents, you have your client fill out an estate tax, power of attorney, now you have to submit it. Submitting it means mailing it to the proper address.
118
00:23:41.810 --> 00:23:54.559
Scott Kestenbaum: If you want to expedite it, and you want to send it by private delivery service, I can't emphasize enough, make sure you look at the New York State Publication 55. It tells you specifically the address to send it to.
119
00:23:54.560 --> 00:24:02.780
Scott Kestenbaum: I have taken over estates where the attorney has literally sent the release of lien application to the wrong address, and that's why it didn't get processed.
120
00:24:03.150 --> 00:24:05.100
Scott Kestenbaum: Simple, very easy fix.
121
00:24:06.360 --> 00:24:15.560
Scott Kestenbaum: Like I said, in addition to New York State, there also is a federal estate tax lien that attaches to real property that's in a decedent's estate.
122
00:24:15.560 --> 00:24:27.869
Scott Kestenbaum: Unlike these liens that are… that deal with income taxes, the lien automatically attaches. So, again, before you were able to sell real property from an estate or a co-op.
123
00:24:28.010 --> 00:24:46.729
Scott Kestenbaum: I mentioned real property, but I am also referring to co-ops, because in a co-op, there is no title report, but there is a management company, and there's a transfer agent, and they will have a laundry list of requirements that you need, and among those requirements typically is
124
00:24:46.730 --> 00:24:50.079
Scott Kestenbaum: Definitely a New York, a New York State release of lien.
125
00:24:50.080 --> 00:24:56.530
Scott Kestenbaum: And they will often require a federal estate tax release of lien. So, like New York State.
126
00:24:56.620 --> 00:25:01.759
Scott Kestenbaum: the starting point is a form. The form is called Form 4422.
127
00:25:01.900 --> 00:25:05.560
Scott Kestenbaum: Typically, the IRS takes longer than New York State.
128
00:25:05.620 --> 00:25:19.749
Scott Kestenbaum: You must submit your application, I recommend at least 45 days prior to the time. Now, in the IRS situation, they will often not issue the release of lien if you don't have a contract for sale.
129
00:25:19.750 --> 00:25:27.540
Scott Kestenbaum: So, unlike the example I gave before, where someone comes to you, they don't have a contract because they don't have the authority to enter into a contract.
130
00:25:27.740 --> 00:25:41.559
Scott Kestenbaum: The IRS will typically not even entertain the application unless you send them a copy of the sales contract. And in fact, as you will see because the forms are attached, on the 4422, you have to indicate who the buyer is.
131
00:25:41.790 --> 00:25:48.750
Scott Kestenbaum: So, clearly, you need all of this. Now, as we know, because most of you on this call are probably lawyers or accountants.
132
00:25:48.750 --> 00:26:10.100
Scott Kestenbaum: The IRS estate tax exemption has gone up dramatically, and it's currently at $15 million, which means that many, many estates are not required to file an estate tax return. And what the IRS has done is that they have said, we are not going to issue an estate tax release of lien if the
133
00:26:10.100 --> 00:26:11.990
Scott Kestenbaum: There is not a taxable estate.
134
00:26:12.090 --> 00:26:27.590
Scott Kestenbaum: With that being said, there are co-ops that say, well, we don't care that they're not going to give you a release of lien, we need something. So the IRS has this other thing called a Letter 1352. A Letter 1352 is a letter basically saying.
135
00:26:27.590 --> 00:26:40.730
Scott Kestenbaum: We acknowledge this estate does not require an estate tax return. We are not going to issue a formal release of lien. We're going to issue this letter saying that it is clear, this estate is clear to sell this particular co-op.
136
00:26:40.880 --> 00:26:56.539
Scott Kestenbaum: That 4422 or that 1352 must be given to the management company and is required at the closing. So make sure that you have both of those items. The key here, in all cases, is think ahead.
137
00:26:56.540 --> 00:27:16.179
Scott Kestenbaum: Don't be the person, the lawyer who said, yeah, I can handle your real estate transaction from this estate, and when the closing list comes from the co-op or the title company, and it has a release of lien listed on there, don't be the lawyer who's stuck saying, I don't know what that is, and I don't have it, or I don't even know how to apply for it.
138
00:27:16.230 --> 00:27:20.659
Scott Kestenbaum: Get it in advance. As I said, New York State, you can do it even before you're appointed.
139
00:27:20.990 --> 00:27:26.459
Scott Kestenbaum: the estate tax release of liens do not expire. So, get them right away.
140
00:27:26.590 --> 00:27:46.119
Scott Kestenbaum: coordinate with the accountants. Make sure you have all the information. Some of the forms require specific information about the estate. Some of the forms require specific values. So, if you don't have a contract for sale, but you need to know what the, excuse me, the real property is worth, make sure you have an appraisal.
141
00:27:46.120 --> 00:27:52.739
Scott Kestenbaum: So the takeaway here is make sure… these are the forms that are at the back. I have redacted all of them.
142
00:27:52.740 --> 00:28:06.589
Scott Kestenbaum: I have redacted an ET117 so you can see what you need for New York State. Same with a 4422. Like IRS, excuse me, like New York State, I encourage you to get a power of attorney from your client, because
143
00:28:06.590 --> 00:28:21.130
Scott Kestenbaum: In most cases, New York State and the IRS will ask for additional documents. If you don't have power of attorney, you need to go back to your client each time and ask them to sign new papers. It would be much easier if they gave you power of attorney. You would be able to
144
00:28:21.130 --> 00:28:25.079
Scott Kestenbaum: Make any corrections to the forms, and submit any additional information.
145
00:28:25.080 --> 00:28:43.329
Scott Kestenbaum: So, I know I've covered a lot, and there are many slides here, and there are many forms attached at the end. As you can see, here's a redacted ET117, here's an estate tax affidavit. Sometimes, a title company will say, okay, you don't have the release of lien, we're closing next week.
146
00:28:43.360 --> 00:28:51.260
Scott Kestenbaum: Can you specifically state that this estate was not subject to a state tax? And sometimes, I'm not going to say often, but many times.
147
00:28:51.440 --> 00:29:07.559
Scott Kestenbaum: a title company will allow a fiduciary to fill out an affidavit and swear under penalties of perjury that there are no estate taxes due, and they will let them close anyway. Co-ops will never allow this, but in real property situations, many title companies will allow it, so I have…
148
00:29:07.560 --> 00:29:22.749
Scott Kestenbaum: an example affidavit here for an estate tax affidavit. I have the 4422, which, as you can see, requires a lot of information. This is an example of a release of lien from the IRS, and this is an example of a letter 1352.
149
00:29:22.770 --> 00:29:32.820
Scott Kestenbaum: So, Scott and I covered a lot of territory. As I said, we did not go through in detail every slide, so if you have any questions, our contact information is listed right there.
150
00:29:33.490 --> 00:29:35.090
Scott Kestenbaum: Great. To Jonathan.
151
00:29:35.090 --> 00:29:58.909
Jonathan Shenkman: Great, thank you so much, Scott and Jill. If anyone's any specific questions, new business opportunities, or any other issues they'd like to discuss, please feel free to reach out directly to Scott and Jill, or myself where appropriate, and I'll be sure to also include their contact information in the follow-up email to this program. Just 3 more quick items before I let you go. First, my next webinar is on Thursday, June 18th, at 8.30am, featuring yours truly.
152
00:29:58.910 --> 00:30:18.330
Jonathan Shenkman: Jonathan I. Shenkman, President and Chief Investment Officer of Park Bridge Wealth Management, and I'm going to be discussing mid-year money check-in, the 2026 trends that are impacting your wealth, and I'll be sure to send out the invitation to this program in the coming days. In the meantime, if you have a friend or a colleague who'd find these webinars of interest, they can subscribe to my webinar distribution list
153
00:30:18.330 --> 00:30:43.259
Jonathan Shenkman: on my website at parkbridgewealth.com forward slash webinars. Second, you can follow all my work on X and Instagram at Jonathan on Money, and by connecting with me on LinkedIn, you could also listen to my weekly podcast called Jonathan on Money, which is available on Apple, Spotify, or wherever you get your podcasts. And you can watch my practical planning videos, which I post several times a week, by following me on YouTube at Jonathan on Money as well. And third, please take 30 seconds to fill out my survey at the end of this
154
00:30:43.260 --> 00:30:55.029
Jonathan Shenkman: program. It helps me improve my webinars and provide timely and interesting content to attendees. I thank you in advance for that. And with that, this concludes today's session. Please stay safe and healthy, and have a wonderful day, everybody.