IRS lien at a foreclosure auction...
Q.I went to a foreclosure auction today and it was revealed before the bidding started that the house had an IRS lien of $40k on it. Interestingly, many of the "locals" bid the price up to what I thought it was worth w/o this $40k lean. I assume these guys were smart enough to not overbid by so much... they must have known that the lien was "negotiable." My question is, is there some way to wipe out this lien once you purchase the house? Are you able to work a deal with the IRS to pay only a small portion of the lien, or none at all? I'm in Mass if it matters.
A.This is a pretty big subject, but the short answer is that the IRS retains a *redemptive right* for 120 days. They never redeem on their own but rather are requred to get the 3rd party to put up a 20% deposit then the property is advertised to get competing bids. Since this is so cumbersome, IRS prefers to hassle the successful bidder at the foreclosure sale to pay $$$ to get the redemption relaesed. HOWEVER, IRS fails to monitor these sales well and generally the whole thing just goes away once the 120-days run out. That said, I've been *redeemed* twice. They do not reimburse any expenses except securing the property. If you rehab and get caught (redeemed) you get no money for the rehab. Are you able to work a deal with the IRS Again, this often comes down to people skills & relationships. When IRS tried to extort $$$ from me I told them to take a giant leap so they got 3rd party $$$ and I was taken out. Later after working the problem over in my mind for a few years I successfull ran a scam that sent the IRS investor lackies off the trail. This method worked for me twice and could work again in the future. Funny how thinking about an issue for years can finally yield a workable scheme to defeat the adversary. My last conversation with an IRS lady on one file where my scheme worked was rewarding ... she said: "You are a clever man" (well anyone can be clever given 8 years preparation).
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