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• Risk Analysis - Tax Liens
• Tax Liens and Competing Claims
• Tax Liens and Statute of Limitations
• Discharging a Tax Lien
• Tax Liens - From the Tax Lien Purchaser's Perspective
• Tax Liens - From the Government's Perspective
• Tax Liens - From the Tax Payer's Perspective
• Negative Effect of Tax Liens on 3rd Parties
• Pitfalls of Investing in Tax Liens
• Pitfalls of Tax Lien Sales for Taxation Authorities and Local Government

IRS Tax Liens - Resolving & Removal of Federal Tax Liens

Federal income tax liens are regulated by Federal legislation and due to this consistency, the administration of tax incidents is proven to be far easier than in other tax liens. The IRS have extensive control to ensure the retrieval of tax debt, and the Federal government, without any further action whatsoever and by pure operation of the law, is vested with the right of an IRS tax  lien as soon as a taxpayer is assessed as owing a tax debt to the government.

Statutory Rights of the Government
A Federal income tax lien is the right of the Federal tax authority, as delegated representative of the Federal government, to levy and enforce a tax debt, and to hold the property of the delinquent taxpayer as security thereof.

The Internal Revenue Service is the relevant Federal tax authority of the US government, and their acquisition of an IRS tax lien is an aggressive collection tactic to ensure the efficient administration of taxation.

This Federal income lien is a liability incurred by the taxpayer as soon as the IRS have assessed that a tax debt does in fact exist in favor of the government, and this liability continues until it is satisfied or becomes unenforceable by reason of a lapse of time. On fact effecting the removal of IRS tax liens is that if the tax debt was assessed after 1990, the IRS tax lien is unenforceable after 10 years, and if assessed before that date, they become unenforceable after 6 years.

Federal tax liens arise through the operation of the law alone and no particular action is required of the government to assert this cause of action. A Notice of Federal Tax Lien is filed by the government in order to create a priority over other creditors,and following the legal requirement of due process, notice of the lien is given to both the tax debtor and any mortgagee on the property. Due to the risk of losing its investment in a foreclosure sale of the property, the mortgagee may at this point elect to pay the tax on the IRS tax lien and then seek repayment from the taxpayer.

Alternatively, as a method of resolving Federal tax liens the government can recoup the taxes owed in a foreclosure sale of the property in a ‘tax deed sale’, where the title deed to the property is sold, or a ‘tax lien certificate sale’, where the rights to collect the tax payable on the property is sold to a third party who provides the government with its revenue, and then exercises powerful rights of collection to recover the debt from the delinquent taxpayer. If the taxpayer does not satisfy the tax debt to the lien purchaser within the statutory period of redemption, along with the additional interest, the lien holder is then able to foreclose on the property with the same rights that the government originally held in its ability to affect a tax deed sale.

Tax Liens Attach to Everything
Property tax per se, is a local tax and while the Federal government may not derive any benefit from property tax itself , a federal tax lien attaches to all the property of the taxpayer, both personal property and real property. Where property is owned as tenants in common or joint tenants, this property is in reality divided into shares, and a Federal lien will attach to a particular share if it is owned by the delinquent taxpayer. Most jurisdictions have held that the entire property may be sold in order to recoup the debt rather than to merely sell the tax debtor’s share in the property.

Sometimes Federal tax liens will defer and allow priority to be given over it to another creditor whose lien was perfected prior to that of the IRS, or even a State lien where the tax debt is based on the value of the property, even though the Federal lien was filed earlier in time. However, a Federal tax lien generally ought to be a safer instrument, and one to be preferred over other types of liens, if for no reason other than due to the statutory procedure which is reflected in clear Federal legislation. In contrast, the States each have their own statutory provisions which not only prove challenging for the investor to observe and follow, but may be subject to different conditions in terms of competing lien interests of the same property.

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