Steve Parker asked:


You need to remember whenever buying tax lien certificates at a tax auction; it is very important to understanding how the purchase works before you arrive to make the bid. An auction for tax lien properties usually requires a ten percent deposit in the form of a certified check. When most bidders will access the tax lien certificate on the same day of the auction; others will receive them by mail it all depends on the rules of that state or county. A tax lien is the usually the result of not paying property taxes on time and the governing authority where you live takes charge of collecting the unpaid taxes.

In case of a tax lien on certain tract of land sold for delinquent taxes, the provisions might be decreed through the court imposed tax lien. Investors receive a fixed amount of interest monthly written on the note for a specific time period according to the tax lien certificate. Investors receive anywhere from 15 to 50 percent on their investments when dealing with tax lien certificates, and they are guaranteed by the government. It is very important to understand whether or not your state allows the owner of tax lien certificates to be senior to all other mortgages and liens.

Each of the tax lien certificates usually allow the owner to be repaid the fee of the delinquent taxes plus interest accrued. Depending upon what type of property and the delinquency status of your taxes will mean which type of tax lien imposed. An auction of a tax lien certificate perfectly involves selling a certificate to claim the total taxes owed and any administrative charges and interest on the amount due. If you wish to purchase 150,000 dollars worth of tax certificates, you must place ten percent on deposit for the property. A tax lien might be bought over the internet and mail in some cases where you are not required to advert the auction to make a purchase.

There are tax liens on file showing a particular partnership or corporation; it is wise to know whom else will have rights to the property before you make your bid. Foreclosing on your tax lien certificates can be as easy as filing an application for the process with your county court in some states. You need to get all of the facts when you receive your tax lien information in the mail; this will help you to set up a payment plan to avoid further actions taken by the government. You need to learn more about what will happen if you do not pay your own property taxes’ contact your mortgage company.

In terms of picking a high yielding investment, tax liens might bring decent returns if bought wisely. It is very important to know how long the term of the tax lien certificate will run and what happens if not paid. Investors receive very advanced returns for short periods of time, and it is guaranteed with real property. Most people assume that doing research and proper background checking on a property can eliminate all the risk involved in tax lien investing. You decide to know what happens when people choose to avoid their tax lien payments’

Neil Lemons asked:


The IRS has wide powers of collection of tax. One of the first things they do is to file a lien. Actually, by law, lien attaches to all the properties of the tax payer once a federal tax demand is raised. What this means is that the IRS has a right over these properties to the extent of the tax dues.

However, to make the lien effective, it needs to be filed in the public records which can be the local county office where you file tax returns. Normally this is done if the IRS considers that you are neglecting your tax dues.

The filing of lien has very adverse implication for the tax payer. It has the effect of serving a public notice particularly on the creditors that the properties of the tax payer are now encumbered with the tax debt. As a result, the credit rating of the tax payer takes a nosedive.

Normally, all credits are advanced against security of the assets owned by a person whether or not the person is actually required to mortgage a property in favor of the creditor. The filing of the tax lien has the effect of announcing to the world at large that the person is a tax defaulter.

No creditor will like to lend to a person knowing that the properties of the person are not free from debt and therefore his loan is not secure. Getting fresh loans will become very difficult for such a person.

What is the solution? Of course, the best thing to do is to clear the tax debt immediately and get the lien released. This can be done through payment or through adjustment of pending refunds. The IRS is obliged to release the lien within thirty days of the full tax dues including interest and penalty being paid.

If it is not possible to pay up the entire dues in one lump sum, the tax payer can make request for payment in installments. Once an installment agreement is reached, it may be possible to request for release of lien. However, this request may not be granted as the IRS likes to keep the lien as security of the tax debt.

Nevertheless, it may be possible to negotiate this relief if the installments are paid through payroll deduction from wages or electronic clearance from the bank account. This is because the consent given for such automatic deduction becomes a guarantee for future installment payments.

Another option is to give a bond to the satisfaction of the IRS guaranteeing the payment. This can be in the form of a bank guarantee or any third party guarantee. It should also be possible to offer a scheme of payment through sale of part of the property or one of the properties.

The IRS may release the lien if they are convinced that the sale will result in the collection of tax. It is also possible to get the lien on a property subordinated to another lien to access further credit.

The key lies in negotiating a bonafide scheme of tax payment with the IRS. For more information, see Publication 1450 of the IRS available on the IRS’s website. If the thought of trying to fight the government scares you, you should contact a professional IRS tax negotiator and have them remove the lien for you.

Gen Wright asked:


Are you searching for a new home, a vacation home, a rental property or a house to flip? If so, the ideal place to begin such a search is through government tax foreclosures. There are an abundant number of large and expansive houses throughout the country just waiting for the opportune investor to grab them up. Unfortunately, with the current financial climate, foreclosures are at an all time high, making this a field ripe for the picking. Government tax foreclosures can offer investors cents on the dollar investment. Investors need only be aware of how to identify such foreclosures, how to thoroughly inspect and evaluate the property and at what point to make an offer on the property.

In a Government tax foreclosure, the government is attempting to reclaim back taxes associated with the property, as well as any interest on the principal amount. Government tax foreclosures may either be administrated through the courts or through a trustee, depending upon State laws. There are many steps during the pre-foreclosure process and they are complicated by the fact that each State follows different procedures. Since the pre-foreclosure process tends to be extremely complicated, it is not recommended that an investor attempt to purchase a property during the pre-foreclosure process, but rather wait until the property has completed the foreclosure process.

Once foreclosure is finalized, the investor will know that all back taxes, liens, bonds and debts will have been cleared. In this way, the investor will not be surprised later on when they sell the property by unknown debts.Once foreclosure proceedings are completed, an investor can utilize a reliable property listing company. These companies will have access to many more resources than the general public. Depending upon the State in which you are searching for a house, each draws upon different types of printed and/or internet materials to advertise such foreclosures. A company devoted to property acquisition will know what types of materials such government entities use to advertise their foreclosures, as well as having access to software that can specifically search for the type of real estate the investor is interested in acquiring.

“The Money Pit”? is not what any investor wishes to find themselves embroiled within. To avoid this, it is strongly suggested that a thorough physical inspection of the property be done by the investor prior to an offer being given on the residence. Involving your own inspectors, such as pest and structural inspectors, will assure you that the property you are making an offer on is a sound investment. The investor should take into consideration the condition of the property, any repair costs and any debts that might remain on the house after the foreclosure. Any of these costs should be subtracted from the final offer. Such properties are an excellent investment for a person who can either do the work themselves or has access to those who can do it for them at a reasonable price.

This country is currently full of opportunities to improve your overall cash situation through government tax foreclosures. Taxes are a fact in all of our lives, and unfortunately, many people in this country are having a difficult time making ends meet. But ultimately, if an investor has the funds to be able to make an offer on a financially distressed property, this will ultimately contribute gradually to the financial climate of this country. Is it better for such properties to lie vacant or is it better that investments once more begin and create a financially healthy environment for all of us? Investing in Government foreclosed properties has a two-fold advantage, capital gain for the investor and once again launching us towards a free market w

Andrew Bicknell asked:


It’s hard to find anyone who doesn’t want to save money when buying big ticket items. There is no better feeling then buying a new car or a piece of real estate and knowing you got a great deal. If you are one of these bargain loving individuals then government seized and surplus auctions could be the perfect place for you.

Every year the government seizes thousands upon thousands of vehicles and other property as a result of criminal activity, tax liens, defaulted loans, and to pay back taxes that are owed. At the same time federal, state, and local governments replace their own properties which leaves them with a surplus of goods that need to be gotten rid of. Because storage space is limited and costly it is in these agencies best interest to get rid of these properties as quickly as possible. The best way to do this is to auction these seized and surplus properties off at discounted prices to the highest bidder.

The government has been auctioning off seized and surplus stuff for years but only those in the know knew about it. This has changed with the coming of the internet which has brought the auction scene to the general public. These auctions have always been open to anyone who wanted to attend but in many cases most people didn’t know about them let alone when and where they were being held.

That’s the beauty of the internet auction site, it will give you an updated list of auctions times and places along with the ability to preview the properties that are to be auctioned off. Government agencies are more then happy to provide information to these sites to help expedite the sale of these items. You will also find tips, tricks, and techniques to help make your auction experience a successful one.

Most of the goods and property found at these auctions are in good working order and have been well cared for. Even so it is still in your best interest to gather as much information about the items you are interested in before placing a bid. The good online auction sites will give you the ability to do this background research and better prepare you for the day the bidding starts.

Buying cheap properties at government seized and surplus auctions is a great way to save money. With online auctions now available it is now easier then ever to find and buy exactly what you are looking for.

Jack Sternberg asked:


A lien is defined as a claim against a property for repayment of a loan or other judgments.

This sounds like a very boring topic, but it’s one of vital interest to you as an investor. This is because of one very important fact–a lien affects the ability to transfer ownership of a property!

Believe me, it gets very exciting (and unpleasant) when a lien pops up and causes a very profitable deal to fall through. Failure to do due diligence on properties can cost you a lot of money!

So, my advice is to study closely the information in this article. It can keep you on the path of profitability and save you considerable heartache.

Categories of Liens

As I said earlier, liens are a claim against a property. In general, there are two categories of liensvoluntary and involuntary.

A voluntary lien is a mortgage or deed of trust lien. In other words, when you buy a property, you agree that the lender has a claim on that property until the mortgage or deed of trust is paid in full. An involuntary lien is the result of legal action. Hopefully, you won’t have to deal with every type of lien I describe below, but, if you do, you’ll be forewarned and forearmed and can deal with the situation in the most effective way possible.

Types of Liens

Bail bond lien

A bail bond allows a person arrested on criminal charges to be released on bail pending his or her trial. One way to get a bond is to pledge capital in the form of real property (a home, etc.).

Child support payment

When a property owner fails to make court-ordered child support payments, the state government places a lien against the property’s title.

Code enforcement lien

This type of lien occurs when a property owner is fined for failing to correct code violations and fails to pay the resulting fine.

The local enforcement board then places a lien on the property’s title.

Corporate franchise lien

This lien can occur within states that have a corporate franchise tax for the right to do business within those states. If a corporation fails to pay the tax, the state places a lien against any corporate real property within the state.

Federal judgment lien

This lien involves debtors who’ve defaulted on federally guaranteed loans (SBA loans, student-guaranteed loans, etc.). When default occurs, a lien is placed against the property title.

Federal tax lien

When a person fails to pay federal income tax, the Internal Revenue Service has the statutory power to place a lien against the title of any real property belonging to that person.

Needless to say, you don’t want to fall into the swamp of legal entanglement that comes from dealing with the IRS.

Homeowners’ association lien

This lien occurs when a member of a homeowners’ association fails to pay his or her dues as per the deed to the property. The lien is placed against the property title.

Judgment lien

This type of lien occurs when lawsuits award monetary damages to the plaintiff against the property owner. In this case, a lien is placed against both personal and real property of the defendant until the judgment is made.

Marital support lien

A lien is placed against a property’s title when a property owner doesn’t pay court-ordered marital support. This can be done on the local, state and federal levels.

Mechanic’s lien

This is a statutory lien which allows architects, contractors, engineers, mechanics, surveyors, etc. to take legal action against a debtor who’s failed to pay for furnished work or material for the improvement of real property. The lien is placed against the real property being worked on.

Mortgage and deed of trust lien

As I mentioned earlier, this is a voluntary lien created when real property is pledged as security for the repayment of the debt.

Municipal lien

A lien is placed against a property’s title when a property owner fails to pay for municipal services (e.g., water, electricity, etc.).

Public defender lien

When a property owner fails to pay for a court-appointed public defender, governments place a lien against the property title.

Real property tax lien

When a property owner fails to pay his or her property taxes, liens are placed against the property by local authorities.

State inheritance tax lien

This is a tax levied against the estates of deceased individuals.

If the tax is not paid, a lien is placed against the estate for the amount owed.

Welfare lien

The local, state, and federal governments can place a lien against the property’s title when a property owner fraudulently collects welfare payments.

Sources of Information About Liens

There are many local, state, and federal sources for getting detailed information on liens. In terms of state and local agencies, the names vary with the region, but, in general, you can get information from the following offices:

Circuit court office

Check for tax liens on state income, state inheritance, state franchise taxes, etc. Also, check for liens against estates of deceased persons, guardianship of minors and incompetents, termination of joint tenancies, etc.

County clerk’s office

Check for the same items as in the circuit court office.

Country recorder’s office

Look for judgment liens, property tax liens, federal tax liens, etc.

Check for conditional sales contracts (contracts for deed, land sales contracts, etc.).

Also, look for notices of “lis penden.” This is a notice filed or recorded for the purpose of warning all persons that the title or right to the possession of certain real property is in litigation. The Latin term literally means “suit pending.”

Municipal clerk’s records

Analyze the records for any liens for failure to pay for municipal services like water, sewer, and trash removal services. Also, check for any code enforcement fines.

United States Court

Look for any federal judgments against the title holder. These could include federal tax liens and liens resulting from defaults on FHA, Department of Veterans Affairs (DVA), SBA, and student loans.(see http://www.pacer.psc.uscourts.gov )

Key Point: Always, always perform due diligence in regard to liens! A little investment of research time can make the difference between a nice profit and a financial and legal nightmare!

Jack Sternberg

macky note asked:


 

The Federal Tax Lien is a public document that confirms the claim of United States in the title, right and interest of the taxpayer’s assets. Where this document is kept depends on the law locally, either at the County clerk’s office or at the Secretary of State’s office.

The Federal Tax Lien is a negative mark on the credit report of a debtor.  Many creditors ask for notes to check, once they know of this Federal Tax Lien (FTL.)

The Federal Tax Lien is considered to be the major claim against the assets of the debtor, excluding the first mortgage holders who have all their financing documents perfectly filed. The Federal Tax Lien may even shake the position of the factoring firms that lend on bank revolving lines of credit and on accounts receivable.

Local law in some jurisdictions allows separate filing of liens for personal property and any real property.  In such cases, two identical liens are filed by the IRS, one under the real property records and the other under the personal property records.  It is important to file both; otherwise it amounts to not perfecting the government claim on all assets.  If we are talking about a corporation as the debtor, failure to file, depending on the local law, may result in imperfect claim. 

The Federal Tax Lien is the main basis for the IRS for foreclosure of the assets of the debtor with seizure.  Ever since the 1998 IRS Reform Act, these seizures have reduced. You should not mistake the lien with the IRS levy.   The IRS has the power to levy on a debtor’s wages or accounts without a Federal Tax Lien. 

People can also appeal the filing of a Federal Tax Lien if they have a good reason to do so.  If you are able to confirm that the Federal Tax Lien will actually not help the government in recovering payments or that there is an incorrect tax assessment, you stand a chance to succeed.

 

For more information about this article try to visit Criminal Records

 

Christy Pinheiro, EA asked:


Delay Capital Gains on Investment Property and Rentals: IRC Code Section1033: Involuntary Conversions

Section 1033 of the Internal Revenue Code is a godsend to taxpayers and investors who are struggling with gain from an involuntary conversion. It is a way to defer gain for years, and then re-invest all the gain in similar property, delaying gain indefinitely until the property is sold or disposed of. What is an “involuntary conversion”, you ask? Well, most of the time, involuntary conversions occur when property is destroyed by natural disaster. When hurricane Katrina hit New Orleans, a all the homes and shops that were destroyed were “involuntarily converted”.

 For the purposes of IRC Section 1033, these are all “qualifying” events:



Property that is stolen, seized, or condemned by a government agency. A tax lien sale to pay delinquent taxes does not qualify.

Property that is destroyed by a natural disaster, fire, theft, or other casualty



 

 

Qualified Farmers additionally qualify for Section 1033 in these cases:



If livestock is sold because of severe drought or disease

If farmland is sold by the government to meet a Federal guideline sold pursuant to reclamation laws

If a farmer has an involuntarily conversion because of soil contamination or other environmental contamination, and it is not feasible or practical for the farmer to reinvest in livestock, the farmer may reinvest his insurance proceeds in other property, including real property.



 

 

The rules for the deferment of gain under Section 1033 are complex, but here is a brief overview:

A taxpayer may defer all the gain on an involuntary conversion as long as the taxpayer follows some strict guidelines. The taxpayer must invest the full amount of the gain in similar replacement property, and the taxpayer must re-invest the amount within a certain time period. The property must qualify as like-kind property; for example, an apartment complex purchased to replace another apartment complex.

The replacement deadline for personal-use property is two years. For business or investment property, it is either two or three years, depending on the type of involuntary conversion. In a Presidentially Declared Disaster Area, the replacement period is longer for some property. A taxpayer has five years to purchase replacement property if the property was destroyed during the September 11, 2001 terrorist attack upon the United States. If a taxpayer cannot find a suitable replacement property within the time period, he may ask the IRS for an extension.

Such a great tax-saving tool—the legal postponement of gain for years; while still being able to re-invest in a similar property when you have found a suitable replacement. There are a few pitfalls to look out for, though. There are limits for related parties, and if the taxpayer misses the deadline without an extension, they may have to recognize the full amount of the gain.

The rules of Section 1033 are very complex. This article is, therefore, purely informational and not intended to be legal advice. If you have had a casualty loss and you are considering a Section 1033 deferment of income, you should discuss the matters with your accountant, attorney, or other qualified person. Taxpayers should consult their attorneys or tax practicioners in order to avoid errors regarding the replacement period.

 

mike asked:


A tax lien is a legal claim filed in court by a government agency against a person or business owing taxes. Tax liens normally attach to money or property to pay the taxes. A list of tax liens properties on which the taxes has not been paid are kept at the county courthouse along with the proper and complete documentation to avoid any legal problems afterward.

Every year properties are taxed for their value and every year plenty of people fail to pay their taxes on time, incurring taxes and plenty on themselves either due to the financial issue or they just misplaced the tax bills. If you are late to pay your dues then the government seeks investors to balance their budget. Tax Liens can be filed for income taxes, unemployment taxes, sales taxes, real estate excise taxes, Social Security or disability taxes. Once the tax lien is paid, papers are filed with the courts, affirming the discharge of the property.

Many investors invest their assets in the hope that they will be getting huge profit through it but in spite there lies some awful fact which must be known especially (if you are a investor) in order to avoid any complication, one disaster discussion of investment can wipe out your whole capital and your enthusiasm from all this kind of investment.

The first step should be of building a profitable portfolio of tax liens to your self only to decide the basic purpose of your tax lien investment. Developing a portfolio will surely answer your most critical question like why do I want to invest in tax liens in the first place? Also your reason for investing will determine what type of investment will be best for you.

With the passage of time the tax lien auctions business got huge popularity, most probably because of the abrupt turning of the real estate market and worst jumping down of the stock market which has remained unstable for some time thus compel investor to see some other ways through which they can get a healthy positive outcome with huge benefit. Although profit in tax liens is slow but still it is a hidden secret to the investors. Investing in tax liens assures that your capital will go towards something that is profitable and with a set time period where you can anticipate realizing your profit. Only you have to learn the fundamental principals which are golden and yet very essential to acquire hefty profit. Also try to get more and more knowledge to strengthen your foundation in tax lien business, which could be done through the acquaintance with the property laws, ordinance and so on.

Roni Deutch asked:


An IRS tax lien is the federal government’s right to ensure payment of owed taxes by allowing them to place a secured debt on a negligent taxpayer’s property. Tax liens often result because of delinquent taxes and can be placed on real property or personal property. Typically, they act almost as a mortgage against the property and only come into play when the taxpayer is attempting to sell the real or personal property. At the time of sale, the IRS can then claim a right to the proceeds of the sale.

The IRS may file a federal tax lien if a taxpayer owes back taxes. According to the Internal Revenue Code, Section 6321, “[i]f any person liable to pay any tax neglects or refuses to pay the same after demand, the amount including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition there to, shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.” The IRS files tax liens to assist in its efforts to collect the taxes owed. A lien gives the IRS a legal claim to your property as security or payment for the tax liability. A tax lien is different than a wage garnishment or bank levy.

In order to have a lien released a taxpayer must obtain a Release of the Notice of Federal Tax Lien. Generally, the IRS will not release a lien until the tax has either been paid in full or no longer has a legal interest in collecting the tax. The IRS has standardized procedures for lien releases, discharges and subordination. In situations that qualify for the removal of a lien, the IRS will generally remove the lien within 30 days and the taxpayer may receive a copy of the Certificate of Release of Federal Tax Lien.

An IRS levy is a technical term used to denote an administrative action by the IRS to actually seize property to satisfy a tax liability. A tax levy gives the government the ability to impose this collection without having to get permission from a court. Typically, the IRS uses a levy to seize two types of property – income and proceeds in a bank account.

The IRS must issue a Notice of Intent to Levy at least thirty days before the IRS can actually impose the levy. However, a Notice of Federal Tax Lien is generally issued after the tax lien arises. Also, while a federal tax lien applies to all of a taxpayer’s property and rights to property, an IRS levy is subject to more specific restrictions. Often times certain property covered by a tax lien may be exempt from an IRS levy. In those instances the IRS must obtain a court judgment in order to take that property.

David Maillie asked:


For years we have seen countless TV ads and even received mailings telling of fortunes that could easily be made buying cars and other expensive items for pennies on the dollar at local government seized auto auctions. According to the ads and mailings the government needs to sell cars and luxury items, including million dollar homes, at a fraction of the retail value. Sounds really enticing, right? Can this be true?

Well, it depends. First are you a government or government qualified non for profit? If so you are entitled to first dibs on these and other items and you may qualify for a 25 to 50% discount depending on your status and use. For instance if you are a organization that helps handicapped or blind people and you are chartered by your state government you most likely qualify. The catch is that these items are not for resale and must be used in the nature of the business. That would rule out the Ferraris and such.

Secondly, are you very powerfully and politically connected? Are you going to add to the local economy job and tax base or put major property back on the tax roles and make it useful. If so, you may be able to get some great deals on state owned properties that are no longer needed. The problem here is you will sign a contract with what will be done with the property in question and the local politicians will hold you to it.

Thirdly, the government is not stupid. They want the maximum return on their items. The more they get the more they can do with it. They have superiors who watch the books and each item and where and how it is disposed of. All hot item cars like Mercedes, Ferraris and other high dollar exotics are sold through agents at either nationwide wholesale auto auctions, public auctions or even on Ebay.

The wholesale only auctions are not open to the public and are for auto dealers only. Each state has their own separate rules governing wholesale auto auctions, but they all generally run the same. The car has a set minimum or reserve and will only sell above this minimum. Public auctions tend to get a lot of the stuff no one else wants. And you many times are buying items similar to foreclosures on the courthouse steps, site unseen and history unknown.

If there are liens, levies, unpaid taxes, etc. on these items and you are the winning bidder you become responsible for them. That means a great deal could be the complete opposite a few days later when you find there is a $100,000 IRS tax lien on that house you bid $25,000 for.