Short Sale with IRS Tax Lien

[Josh D.]

Does anyone know what the IRS's standards are for releasing tax liens on properties that are underwater?

I've got an approval on a property at $605K that appraises at $830K. The outstanding first mortgage is over $1M.

Will the IRS think there's equity because of my purchase price vs. the appraised price or are they strictly comparing appraised price with the outstanding 1st mortgage?

Thanks

JD