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Andrea, Esq.
Andrea, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 11697
Experience:  I have practiced law for 25 yrs. with an emphasis on real estate, business law, criminal defense and family law.
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Tax Deed Sale at County Auction - IRS lien

Resolved Question:

 I'm going to bid on a county auction in Idaho (beginning of June). One of the properties I'm interested in has an IRS lien on it. How can this impact me? I believe the IRS a window of time to dispute the auction. If I win this auction and the IRS disputes it within the window, will I automatically lose the house? I was told the IRS lien really follows the person, not the house, and it can be disputed in court. If the IRS gets the house, will I be reimbursed for the money I spent at the auction? Is there a reputable site to look up liens against owners (not all county websites show complete lien and notice details), without going through a title search company? The one I use usaprotitle.com, never gives me enough details.  Note!  The homes I'm going to bid on are part of a county Tax Sale by the county for unpaid taxes.

Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Andrea, Esq. replied 1 year ago.

Hello and Welcome to JustAnswer, My name is XXXXX XXXXX my goal is to provided you with Excellent Service, Thank you for your question. I need a bit more information, if you do not mind,

 

1. Who is putting the property up for auction ?

2. Does the owner of the property owe money to this individual, or entity who is putting the property up for auction ?

3. When did the IRS put a lien on the property, and for how much ?

 

 

Thank you,

Customer: replied 1 year ago.

This is a county Tax Auction. The home owner did not pay their taxes for the past three years. At that point, the county takes ownership of the property and auctions it off for the amount of taxes (plus penalties) owed. As part of offering this property, the county stated there was an IRS Lien on the property, but they did not state how much. I'm not sure how to find out how much is owed, aside from running a title search. Even then, I don't know if the amount owed the IRS will show up in the title search. I need to know how to find this out. .The county is in first place... and whomever bids highest, gets the property free and clear and is issued a Tax Deed by the county. Do you understand Tax Deed Auctions? It doesn't sound like you're familiar. If you're not, please let me ask another expert. Thanks!

Expert:  Andrea, Esq. replied 1 year ago.

Hello, Christal,

 

Thank you for your additional information. Actually, I am quite familiar with the subject; I have a post-doctoral degree in Federal Taxation, graduating Number 3 in rank, and before starting my own practice, I was Assistant General Counsel, Underwriting and Claims, for one of the largest title companies on the East Coast, but if you prefer another expert, let me know,

 

 

 

ANDREA

 

Customer: replied 1 year ago.
Hi, thank you. No please do respond to my inquiry. I really appreciate it!
Customer: replied 1 year ago.
Hi, hopefully you Will receive this message. I responded to your earlier on my iPhone. It appears as so you're extremely well qualified to answer these questions. Please respond. I'm very appreciative of your inputs.
Expert:  Andrea, Esq. replied 1 year ago.

Good Afternoon, Christal,

 

1. The Internal Revenue Service is very powerful with comparable authority. IRS liens are treated differently than other liens; for example, whereas ordinary liens are generally wiped out in bankruptcy, IRS liens survive bankruptcy. This is true in Tax Auction situations as well, because the IRS lien attaches to the property and the person owing the tax to the IRS and is not wiped out in a tax sale of the property;

 

2. Duration of IRS Lien - Whereas most State taxes do not have a Statute of Limitations, the IRS tax has a ten (10) year Statute of Limitations (I do not know how the IRS let that one slip past it). The lifespan of the IRS tax is 10 years and if nothing is done during that time period, it expires and, if requested, the IRS must issue a Release of Lien; it will not do so on its own;

 

3. Tax Auction and IRS Lien - When an individual is the successful bidder at a State Tax Auction, they buy the property free and clear of all liens, mortgages, and other encumbrances, except for any IRS lien encumbering the property. The IRS lien not only survives the sale, but also follows the person for ten (10) years and during that time , the IRS can seize and sell the property. If this occurs, the buyer of the property loses the property and loses their investment because the IRS does not pay the buyer when they seize and sell the property;

 

4. Determining Amount of IRS Tax - You are correct that the tax lien will appear on a title report, but the amount reflected therein is the amount of the tax owed at the IRS placed the lien on the property. A prospective buyer at a Tax Auction, or any type of sale, including mortgage foreclosure, should obtain the current outstanding balance of the tax with all interest, penalties and any other fees the IRS has imposed on the taxpayer's debt so that the bidder will be able to submit a bid with full knowledge of the financial condition of the property. The individual would be wise to ask the IRS to furnish them with this information in writing with a "per diem" so that the successful bidder can either take this amount into consideration when bidding and have full knowledge of the amount of the liability they would be taking on and the amount necessary to satisfy the IRS debt at any given time,


___________________________________________________________________

 

 

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Thank you for allowing me the opportunity to be of service,

ANDREA

Customer: replied 1 year ago.

Hi,This is what Sacramento County posted on their County tax deed auction website:


IRS LIENS
Internal Revenue Service (IRS) liens are not discharged by the sale even though the Tax Collector has provided proper notice to the IRS before that date. The IRS has an option of purchasing the property back from the purchaser(s) within 120 days. The purchaser will be responsible for any property taxes incurred for the period of time they own the property after purchase and before the IRS takes ownership. (IRS liens will be announced at the time of the tax sale.)


 


You appear to be quoting general IRS Statues (10 year time limit). This does not apply to County Tax Sales (at least in California...and Florida)

Expert:  Andrea, Esq. replied 1 year ago.

You are correct, I am referring to the Internal Revenue Code, however, my Answer is very specific. I do not think that Sacramento County is purposely misleading prospective bidders, but I do know that their statements are misleading and that might be due to someone there, not doing their homework. While they are correct in saying that IRS Liens are not discharged by Tax Sale, it is equally true that they are not discharged at all until the Statute of Limitations expires. Even then, the IRS can seize the property and if the then owner does not raise the affirmative defense of the Statute of Limitations, the California Code of Civil Procedure will deem such defense is waived because if an affirmative defense is not raised, it is deemed waived.

 

The Internal Revenue Code is Federal Law. Where there is a conflict between Federal and State law, Federal law will override State law. By the same principle, a State cannot divest authority from a branch of the Federal Government. Here, we are not even dealing with State government, we are dealing with a County and the principles governing State authority are even more applicable to a County. The Internal Revenue Service has an absolute right to seize the property on which it has a lien because of unpaid Federal taxes. If what the notice says were true, which it is not, you have to ask yourself two things - First, why would the IRS pay for a property to which it already has a right and which it can seize based on their lien and without payment to anyone ? And, second, it is an indisputable fact that the IRS' Liens have a 10 year life span, attach to the property and follow the taxpayer who owes money to the IRS; a State cannot override this right, nor can it divest the IRS of authority; Therefore, how can a County profess to divest the IRS of its right and authority. The Answer is that it cannot.

 

____________________________________________________________________

 

Please be kind enough to rate "Excellent Service" so that I can receive credit for researching your question and providing you

with an Answer, otherwise I will not receive any credit for assisting you,


Bonus and Positive Feedback on Survey are greatly appreciated,



Thank you for allowing me the opportunity to be of service,

ANDREA

 

Andrea, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 11697
Experience: I have practiced law for 25 yrs. with an emphasis on real estate, business law, criminal defense and family law.
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