Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
An IRS(or ANY tax)lien also takes precedent over any other lien. Youe water bill, is usually considered a tax bill, in many areas. It is immediatly placed in first position, ahead of everything else. This is the main reason that most lenders (used too) make a tax and insurance escrow a part of your monthly payment. To make certain their position was secured. They KNEW beyond any doubt that the tax bills and insurance were paid. If you defaulted on your income taxes, that lien from the IRS will still take precedent over the first position mortgage.
In the days when RE was increasing in value, they could afford to wait before foreclosing on your property, they made(recovered) more $$ that way(while penalties, and interest drove the amount you owe, ever higher). Today with decreasing values, they would be more inclined to grab the assets faster.
You can read all you want, a judicial process exists in every state that allows any lien holder, after sufficiently demonstrating that their claim is legitimate to force the sale of a property. Happens VERY infrequently, but the provisions are the same.
I am always amazed at the misinformation given on the internet.
What happens with a lien is very dependent on the $$ owed and the history of the debtor. Big debt, increasing debt due to new years, history of problems equals more likelihood that a compliance officer will have to take steps to get the problem resolved.
Low to medium debt, not increasing with new year's tax bill, payment plan equals much less likelihood that any compliance officer would ever be assigned.
Add a new debt, all bets are generally off.
For my 30 year career mostly in the Taxpayer Advocate's office, it was rare for property to be seized. It was costly and time consuming. It was mostly to stop business owners from pyramiding taxes while still running a business. Individuals caught in this were mostly highly public people with huge debt.
A lien has a fixed statutory limit unless a specific judgment is obtained. It is a public filed document that is filed and establishes the debt priority in case property is sold or transferred or a bankruptcy is filed. Note: if mortgage holders have properly filed their own mortgage liens prior to the IRS, the IRS does not take precedence when the property is sold.
I own a home with my ex-husband, we have been divorced 9 years. He has a lean on our home with the IRS for taxes he did'nt pay. I am not on the tax lean or the title of the home. We now have a buyer for the home. Since I am not on the tax lean or the mortgage, title of the home, will the IRS take my portion of the proceeds of the sale of the home?
NOT TRUE...! In a regular lien, you may wait fifty years to get any money, only when the lien property sells does the person holding the lien get any money.
The IRS can immediately take possession of your property and it belongs to them. No waiting, no fuss, no muss, it's their property as soon as they show up at your doorstep.
That's why I included the web site, figuring people could read...!
Ok, I know this part is 2 years old, but I know someone who put a lien on a house and then foreclosed because the homeowner didn't pay for the cabinet work the person did in the house (it was like $50k worth of work, lots of cabinets, from what I understand). She got title, but the 1st mortgage still exists and can foreclose. In the meantime, she is the legal owner, and has no obligation to pay that 1st mortgage. So she put a tenant in. They have lived there for 3 years now, and I believe she has gotten most of her money back. When the 1st finally does foreclose, the tenants will have to move out (they rented it knowing this from the very beginning), but in the meantime, she keeps getting rent. The foreclosure won't impact her in any way other than that she won't own the house anymore. No legal issues, no credit issues, etc. If the market recovers enough before they foreclose, she could sell the house, pay off the 1st, and keep the proceeds. It is her house legally.
The only difference with an IRS lien is that it takes precedence and wipes out any junior liens, whereas other liens do not.
Quote:
Originally Posted by tdduran
I own a home with my ex-husband, we have been divorced 9 years. He has a lean on our home with the IRS for taxes he did'nt pay. I am not on the tax lean or the title of the home. We now have a buyer for the home. Since I am not on the tax lean or the mortgage, title of the home, will the IRS take my portion of the proceeds of the sale of the home?
Thanks,
Tracy
As for this post update.
If you aren't on the title, then you don't own the house with the ex. Now, your divorce decree may say that you are entitled to half the proceeds, or something. But if you aren't on title, you aren't an owner. Actually, I take that back...if you live in a community property state, and bought the house while you were married, then you may have some obscure ownership interest. But I don't know how being divorced impacts that.
But either way, it is sort of irrelevant.
If the house sells, the IRS lien gets paid first. Anything left goes to the mortgage balance. If there is anything left after commissions and closing costs have been paid, THAT would the amount that you and your ex would have to work with.
How much you get is up to your divorce decree.
I've seen them worded that when the house closes, party A owes party B $10,000. That wording means it doesn't matter what the proceeds are, or even if there are any. If the house sells, person A has to come up with the money.
I've also seen them worded that any proceeds are split xx%/xx%. In that case, yes, you would lose some of your share to the IRS. If the unpaid taxes were accrued after the divorce, I would take this up with your divorce attorney, as that certainly doesn't seem fair to me.
I have a REC with someone who now owes the IRS $850,000. We are not using an escrow co. The deed was recently released to me but I didn't know that one could file bankruptcy on unpaid taxes. Now I'm afraid a lien will be levied on the home and I will not get to own it free and clear once I'm finished paying for it. I doubt the bankruptcy will be approved due to there being no other debt and them owning new boats, cars and other toys that were cash purchases. What are the chances of them coming after this house?
I have a REC with someone who now owes the IRS $850,000. We are not using an escrow co. The deed was recently released to me but I didn't know that one could file bankruptcy on unpaid taxes. Now I'm afraid a lien will be levied on the home and I will not get to own it free and clear once I'm finished paying for it. I doubt the bankruptcy will be approved due to there being no other debt and them owning new boats, cars and other toys that were cash purchases. What are the chances of them coming after this house?
Once the deed is released to you, the house is yours; the seller's problems with the IRS are not your problem. But normally that wouldn't happen until you'd already paid it off.
If the deed is still in the sellers name, the IRS could certainly put a lien on it.
This may be a dumb question, but if the IRS puts a lien on a house a person owns, does the IRS take action and make that person sell the house?
Or is it a scenario where that lien just sits there until the property is refinanced or sold?
Thanks.
The IRS does not take your house because they can outwait you. Eventually the house will be sold or transferred and that's when they will jump in and collect. So yes, generally the lien just sits there until the property is refinanced or sold, until which time your credit is trashed.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
