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I agree. See this:
And, sorry for the Data Dump to come here, but the examples in the code MAY help you to run your situation against the examples to clarify:
26 C.F.R. §(NNN) NNN-NNNNb)–1
Remember McDermott -
The tax lien attaches to original owner's rights ... BUT security interest attaches, for purposes of the federal tax lien statute, when the investor perfected the interest. 26 USC §6323(h)(1). Generally speaking, therefore, and also considering McDermott – the tax lien wins. However, section 6323(a) ABOVE creates an exception from derivative title and gives priority to a security interest that attaches before the tax lien is filed.
I would speak with an a Real Property attorney in your state (especially one who has a good understanding of Debtor - Creditor law) and see whether IN YOUR JURISDICTION the investor has perfected interest.
Hope this helps
...let me know if you have questions'
Thanks for the great information. After reviewing info you sent I found this:
6323(b)(6) REAL PROPERTY TAX AND SPECIAL ASSESSMENT LIENS. --With respect to real property, as against a holder of a lien upon such property, if such lien is entitled under local law to priority over security interests in such property which are prior in time, and such lien secures payment of --
6323(b)(6)(A) a tax of general application levied by any taxing authority based upon the value of such property;
This seems pretty clear...does it make sense to attack IRS from this clause?
Tremendous!! Attacking the validity of the lien much better approach than attacking tax sale/lack of notice/date of sale issues loaded in IRC 7425. If the lien is not valid, these issues not applicable!
I am currently conversing with IRS on these liens and prior to my next contact (and armed with this new information), I have a few followup questions:
IRC defines "security interest" as: 6323(h)(1) SECURITY INTEREST. --The term "security interest" means any interest in property acquired by contract for the purpose of securing payment or performance of an obligation or indemnifying against loss or liability. A security interest exists at any time (A) if, at such time, the property is in existence and the interest has become protected under local law against a subsequent judgment lien arising out of an unsecured obligation, and (B) to the extent that, at such time, the holder has parted with money or money's worth.
What exact wording would you use for describing my "security" as it applies to the above IRC definitions?
Same question on the exact wording for for describing my "security interest"?
Also, 6323(b)6 Real Property Tax states "as against a holder of a lien upon such property" I assume it means IRS lien is invalid against "me" the "holder of the lien" Since that was the case, it remains invalid against "me" now, as title holder. Is that correct? I believe I am really over thinking it, but I worry that the wording simply implies it is solely not a valid lien against the lien holder themselves. (and thus lien remains with property)???
It seems I have 2 approaches: attack knowledge of the lien with(NNN) NNN-NNNNb)1, or from the real estate tax 6323(b)6 and (b)6(a) angle. Any thought on which is better approach with IRS?
Thanks Lane. You have been a tremendous help. Final question (we hope!) and thought!. Your last response included no mention of the IRC. 6323(b)(6) REAL PROPERTY TAX etc. Should I include this clause along with the other 3 points you mention at end of your last response? If so, suggested wording?
Attacking with those 3 points is a slam dunk. My only concern is IRS claims that "security" and "security interest" only apply to securities in the more common sense, as in the stock/bond universe (all of the examples in IRC 6323(b)-1 are such) Or could claim they does not apply because of the separate Real Property Tax clause 6323(b)(6).
Do you have any thoughts on that.
Thanks for your followup. In process of presenting argument to the IRS. Hitting hard on the fact that liens are not valid based on "lack of notice or knowledge" on date I took security interest (day of tax sale).Since the 2 liens were filed after that date, I could not possibly be aware of them on that date! IRS seems to be hanging on their own terminology, hinting they do not think these definitions apply to real estate issues. Using their own terminology I stated security was the "certificate" issued by county "government" and is a " negotiable instrument. On security interest, I stated the tax certificate is a "contract; used for the purpose of "securing payment" of outstanding property taxes. I may throw some other definition sources like legal dictionary to see if I can sway them.
Will keep you posted. Any additional thoughts?
Already there (sorry I failed to mention before). I submitted a discharge of lien request that they rejected based on lack of notice from the county. I am now dealing with a CAP Appeals advisor. Definitely a better method of dealing as I now at least have a back and forth with one individual. He is at least giving some creedance to my argument. I hope to hear back from him shortly and will keep you posted
Fair enough..thanks again
Seriously? Sorry I did not know how it worked for you. I just signed up for the 5 question deal. In the future, we will do one question at a time. I will make sure I put FOR LANE ONLY, in my followups to this and we can do one at a time.