IRS Tax Lien Purchase

8 Replies

I currently have a contract on a duplex. The day before closing my agent called to inform me the property has an IRS lien against it. We were supposed to close Sept 22. I'm on my second extension now, loan is locked until Nov 30. My question is, has anyone dealt with this before and how long did/ does it take for the IRS to agree to the deal? Its been nearly a month now and the IRS still hasn't approved. 

We deal with this type of thing regularly. Once a lienholder of any kind is made aware of an existing sale or refinance, that can complicate the process.

Are you expecting them to take a reduced payoff on their lien? Are they aware of your transaction?

Tom, I'm not sure about the IRS taking a reduced amount. From what I've been told, the lien is $200,000 and my contract is for $160,000. The IRS was sent the contract Sept 22 or so and still no word. Have you bought any houses with IRS liens? How long did they take to approve the sale?

I would not count on them accepting a lesser amount.  It will depend on the total amount of the tax debt and whatever other assets they've put a lien on, but unless the taxpayer has negotiated the IRS taking a lower amount, they won't automatically do it just because your contract is for a lesser amount.

Please update this thread if they do end up accepting less and let us know how it goes.  

Properties can be sold without fully satisfying tax liens but a lot depends on the seller here. Existing mortgages, other property to transfer lien to, etc.

You probably don't want to hear this... since you have a deadline you may want to hire an attorney to speed up the process.

Apparently he has several other properties that the lien extends to. Maybe fortunately for me the gentleman I am buying the duplex from is an attorney and has a CPA handling the IRS negotiations. I will definitely let everyone know the outcome, hopefully soon. 

Just FYI you shouldn't have to worry about contract extensions. Since the seller is in default and can't close, if you are prepared to close that pretty much automatically extends the contract. Of course that will not help you with a loan commitment expiring. 

Does the person who sent the IRS the contract know the proper procedures for getting an IRS loan released? If so ask them the question. If they don't know and just sent a contract and a nice letter, you could wait forever. 

Personally I don't know the process but I would want to make sure whoever was handling it for me, knows the process and had done it before.

Ned, I’m honestly not sure if this CPA has handled IRS tax lien property sales before or not. I’ll get their number and ask if they have sent in the right IRS form, you’re right, it’s worth double checking. That could also put some pressure on the CPA, that could be beneficial... at least at this point it won’t hurt.

Well it took 2 extra months but I finally closed on the duplex. IRS liens will make a purchase much more complicated but if the property is worth it, I say go for it. It was definitely a learning experience. Thank you too all of you for your input.