IRS liens on Tax Sale, Montgomery Co. PA

[Karen Polis]

I'm looking at a property that's going up for tax sale and I see it has 2 open IRS liens on it. I know in other states, such as FL, the IRS has 120 days to redeem the property - they pay you back what you paid plus 6% interest. Not a bad deal. But I've heard that in PA there is no redemption period, though I'm not sure about that. 

Does anyone know the actual laws around IRS liens and Tax sales in PA? I'm not looking for the reactive "stay away from the IRS" kind of response, but actual legal knowledge in order to make a wise decision at the auction.

Thank you for your help.

[David Krulac]

There is  no redemption period in PA., which means that the former owner has NO period of time after the tax sale to pay the taxes and get the property back.

The IRS is not the owner, and state law does not apply to the Federal government of which IRS is part.  In ALL states the IRS has 120 day to cancel the tax sale, if there is a Federal Tax Lien on the property.  They do not pay any interest.  Effectively you can't sell the property during that 120 period, you can't refinance it, you can't get title insurance, and you should not improve the property since all you will be getting back is what you paid at the tax sale.

We have had several properties that we bought at tax sale with multi-million dollar IRS liens.  In one case the IRS claimed that they didn't have proper notice.  The IRS said that notice had to be given to multiple Federal agencies and multiple offices within the IRS BEFORE the 120 day clock started.  So we gave them what they asked for!