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Updated over 4 years ago,

Account Closed
  • Specialist
  • Madison, WI
1
Votes |
11
Posts

Federal IRS Tax Liens versus County Property Tax Lien

Account Closed
  • Specialist
  • Madison, WI
Posted

I could use some advice/info on a Federal Tax Lien versus a County Tax Lien.

Frame of reference - I'm in Dane County, Wisconsin.

I got the house under contract. I was aware of a County Tax Lien on the property of about $25,000. Which would come off the HUD at closing out of the Sellers proceeds.

But when the Title company pulled the title info, they found a huge Federal Tax Lien on the property of about $140,000. I've gone through the process of submitting a Certificate of Discharge to the IRS to Discharge the Federal Tax Lien. They came back and asked for a third party appraisal which I"ve submitted (came in at $150,000).

ARV is about $185,000. Got it signed at $50k. If the IRS won't agree to Discharge the Fed. Tax Lien from the house, or won't agree to a negotiate slightly higher price and then Discharge, the house will be deeded by the County, over to the County, and auctioned off.

What I can't get an answer on, from either the County Tax office or anyone else, is if I can't get the IRS to discharge the Lien, even after a little negotiation on the Sale price, what will happen to the Federal Tax Lien once the County deeds the house to themselves and auctions it off.

1. County Tax office said that most Liens (Mortgages, etc.) don't servive the deed/auction process, they're void. But, cautioned that there might be a Federal Law that allows Fed. IRS Tax Liens to supersede County/State laws.

2. If it does survive the County deed/auction process, will the Lien stay with the house and become the obligation of any buyer at the auction, or will it move from the house to the original Seller/Owner as an individual?

I hope I've described this well?

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