Remove Tax Liens

Remove Tax lien

I have seen this scenario a thousand times, you are looking to buy a house or refinance a mortgage and everything is running smoothly and then a Federal Tax Lien shows up on your credit report. If this sounds familiar or you just want to remove a lien, then read the rest of this Article.

When a person or a business owes money to the Internal Revenue Service, then the IRS will file a lien against the person or business to preserve their right. The lien is filed in the county that the person or business resided in (becomes a public record) and then the credit reporting agencies pick up this information from the public record.

If there is a lien against you, then the first item to do is to find out for what tax year the tax lien is for. Is this a tax lien for unpaid taxes from 2011 or 2000? The reason this is important is that generally the IRS only has 10 years to collect delinquent taxes from a taxpayer. So if the lien is for delinquent taxes from 2000 that were never paid, then the IRS can no longer legally collect the taxes and the lien can be removed.

Another item to look at with a federal tax lien is to verify whether or not the amount owed is still owed. Often a taxpayer will pay off their delinquent taxes and the IRS does not automatically file a tax lien release.

So if the amount of taxes is no longer owed or the 10 year period has lapsed, then the tax lien should be removed. Sometimes the IRS will send a tax lien release to the county to be recorded but more often than not this will not happen. So this is what you will have to do.

First obtain a copy of the lien that has been filed with the local county and then you will have to write a letter to the Internal Revenue Service. The letter should state that the lien should be removed because of payment or the 10year statute of limitations on collections. But make sure you give them the exact date and a copy of the check if the taxes were paid.

Now hopefully they will then send a lien release to be recorded with the county, but often they don’t and you never hear back from the IRS. This is when you have to get a qualified tax professional involved.

Assuming the service does send the lien release, and then you must make sure that it gets recorded in the county that you resided in and notify all the credit reporting agencies. The service does not notify these agencies that the lien has been removed, so you must be proactive and send all the reporting agencies a copy of the lien release.

Dealing with the Internal Revenue Service can be very difficult and expensive for the average person or business. You must be well prepared when dealing with the IRS. The author has over 20 years of experience in successfully helping his clients with the IRS.

If you need help dealing with the IRS or would like to further information on this subject, then contact the author at http://www.mcnameecpalaw.com  

 

Tax Lien Case Study

The Other Foreclosure Crisis:
Property Tax Lien Sales
 National Consumer Law Center, Inc.
CASE STUDIES OF REAL PEOPLE HARMED DUE TO SMALL LIENS
AGAINST THEIR HOMES
Maryland
Vicki Valentine, an unemployed Baltimore homeowner, the redemption costs made it
impossible for her to redeem. The Huffington Post reported that she had fallen behind on a $362
water bill she owed the city. As interest, penalties, and legal fees accrued, the debt ballooned to
$3,600, ten times the original amount. The tax certificate purchaser eventually foreclosed on the
home and Ms. Valentine was later evicted.
Rhode Island
An 81-year-old Rhode Island homeowner was evicted two weeks before Christmas from the
home she had lived in for more than 40 years because she had fallen behind on a $474 sewer
bill. A corporation bought her house at a tax sale for $836.39 and then resold it for $85,000.
New Jersey
Jeanne Lang Boyer, a senior citizen in New Jersey, has fought to keep her home for ten years, as
of March 2012. Crusader Servicing purchased a $5,000 tax lien on her home in 2002 at an auction. Under New
Jersey law, investors at tax lien auctions bid down the interest rate homeowners pay upon
redemption through a competitive process, from the maximum 18% interest to as low as 0%.
However, Crusader Servicing conspired with other investors to bid on liens at the maximum
interest rate allowable by law. No investor undercut another investor’s maximum bid and home
owners were forced to redeem their tax liens as they accrued interest at 18%. Now, with interest
accruing at 18%, Ms. Boyer’s tax debt has reached nearly $80,000 and she has been trying to stop
foreclosure proceedings. The president of Crusader Servicing, Robert W. Stein, pled guilty to an antitrust conspiracy
charge brought by the U.S. Department of Justice and will go to prison.
New York
Doraldina Younge has resided with her husband for over 25 years in the home formerly owned
by her deceased aunt. Ms. Younge’s aunt died intestate and Ms. Younge is the closest known
surviving relative. Ms. Younge has a tumor behind one of her eyes and is legally blind. In
addition, she is mobility-impaired due to complications from diabetes and must use either a
wheelchair or walker. She receives only $935/month in Supplemental Security Income and does
her best to pay both the property taxes and water bill each year.
The Other Foreclosure Crisis:
Property Tax Lien Sales
July 2012
© 2012 National Consumer Law Center, Inc.
In or about May 2008, the Department of Finance sold both the property tax and water liens for
the property where Ms. Younge resided. In June 2008, Ms. Younge paid off both liens in their
entirety. However, while the Department of Finance forwarded the monies for the property
taxes to the appropriate servicer, it held onto the monies for the water lien to be applied
towards future charges. The amount of the water lien was $1,286.33. The mortgage servicer
brought a foreclosure action against Ms. Younge for the water lien.
She was now at risk of losing the home where she has resided for nearly 30 years. Moreover,
given the high interest charged by the servicer, the amount of the water lien more than
quadrupled so that as of July 2010, the balance due for that account was $6,292.33.
Although Ms. Younge is disabled, she was unable to apply for any tax exemptions because the
home remained in her aunt’s name while Ms. Younge petitioned for letters of administration.
Postscript:
Ms. Younge was eventually successful in avoiding foreclosure of the tax lien but the
tax lien servicing company still assessed her $650 in fees.
Montana
Betty Museus had lived alone for many years in her home in Missoula, Montana. With no close
family to assist her, she fell behind on her property taxes. Her home was purchased at tax sale
by Virginia-based Mooring Tax Asset Group for the $5,822.09tax debt. Ms. Museus did not
respond to letters sent to her by Mooring and she failed to redeem the property. Mooring
evicted her, eliminating the remaining equity in Ms. Museus’ house, valued at $150,000.
New Jersey
Frank Cummings’ condominium in New Jersey was sold at a tax sale because he failed to pay a
$716.45 tax bill. If the tax sale certificate were foreclosed, Mr. Cummings would lose
approximately $120,000 of his equity in the condominium. In his legal battle to recover his
home, Cummings informed the court that for at least five years before the tax sale, he was
suffering from depression and alcohol abuse. His condition caused him to neglect paying many
of his bills, to the point that he was living in the condominium without utility service. The court
eventually found that Mr. Cummings was not properly served with the complaint to foreclose
the tax sale certificate, thus permitting him an opportunity to redeem his home.

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