All Forum Posts by: Jonathan Faltot

Quote from @Jonathan Faltot:

Quote from @Chris Seveney:

Quote from @Jonathan Faltot:

We bought a property on foreclosure sale, it has federal tax liens attached. I have heard both ways it can follow the person or the property. I'm also negotiating cash for keys, but I may opt out of doing so if I have to wait for this 180 day redemption period for the IRS to claim the property if they do. 

what has anyone's experience been with this ? The leins are significant, but it is still a great opportunity. 

 knock on wood but never had them redeem, we filled out some form I recall that was a lot of paperwork to notify them and start the clock. I would talk to an attorney or title company as I think you have to file a document to get the clock started on the 180 or 120 days or whatever it is.

Hey Chris, so you had to nofity the IRS yourself, even tho it was just sold to you? I talked to multiple attorneys and i've heard all sorts of things... but conflicting answers on this. Some say the clock starts the day it is sold to me, others say once they are notified, and that all depends on WHO is doing the notifying. The devil is in the details...and i just want a straight answer. Even if it is just to file something like you do.

 we submitted a 14135 form and backup documentation to the IRS and heard back pretty quickly.

Quote from @Jonathan Faltot:

We bought a property on foreclosure sale, it has federal tax liens attached. I have heard both ways it can follow the person or the property. I'm also negotiating cash for keys, but I may opt out of doing so if I have to wait for this 180 day redemption period for the IRS to claim the property if they do. 

what has anyone's experience been with this ? The leins are significant, but it is still a great opportunity. 

 knock on wood but never had them redeem, we filled out some form I recall that was a lot of paperwork to notify them and start the clock. I would talk to an attorney or title company as I think you have to file a document to get the clock started on the 180 or 120 days or whatever it is.

Quote from @Jonathan Faltot:

We bought a property on foreclosure sale, it has federal tax liens attached. I have heard both ways it can follow the person or the property. I'm also negotiating cash for keys, but I may opt out of doing so if I have to wait for this 180 day redemption period for the IRS to claim the property if they do. 

what has anyone's experience been with this ? The leins are significant, but it is still a great opportunity. 

All the posts here are assuming the IRS filed notice of tax lien was filed AFTER the lien that you foreclosed on was filed….. which is probably the case.  However, investors I know have purchased liens and foreclosed on them that were subordinate to IRS liens with the mistaken impression that merely giving the IRS 120 days notification will extinguish the position of and in fact the lien against the subject property.  
An IRS tax lien has the same order of priority as any other lien (property tax liens excepted).  The difference is that it isn’t automatically extinguished by the foreclosure of a SUPERIOR lien; the 120 days notifications is necessary to extinguish their claim.  

So for clarification; If the lien foreclosed is superior to the IRS lien then 120 days notification is necessary and the IRS can pay off the foreclosed lien and take ownership of the subject property.  If the lien foreclosed on is inferior to the IRS lien then the IRS lien is ineffective and not extinguished. 

@Jonathan Faltot Federal tax liens generally follow the person, but when attached to real estate, they can remain with the property even after a foreclosure sale. The IRS has a 120-day right of redemption (not 180 days) to reclaim the property by repaying what you paid at auction. If they don’t act within that window, the lien is typically extinguished.

Before moving forward, check if the foreclosing entity properly notified the IRS—if not, the lien may still be enforceable. Also, contact a title company or real estate attorney to ensure you’re getting clear title. If the liens are large, waiting for the redemption period to expire before paying cash-for-keys may be the safer approach. Even with the risk, this can still be a great opportunity if handled correctly.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

You might also read thru this and see what applies to your situations.

https://www.irs.gov/irm/part5/irm_05-012-004

Quote from @Jonathan Faltot:

We bought a property on foreclosure sale, it has federal tax liens attached. I have heard both ways it can follow the person or the property. I'm also negotiating cash for keys, but I may opt out of doing so if I have to wait for this 180 day redemption period for the IRS to claim the property if they do. 

what has anyone's experience been with this ? The leins are significant, but it is still a great opportunity. 

 knock on wood but never had them redeem, we filled out some form I recall that was a lot of paperwork to notify them and start the clock. I would talk to an attorney or title company as I think you have to file a document to get the clock started on the 180 or 120 days or whatever it is.