In the State of Texas if a house is for closed on that has a IRS lien on it, is the lien paid out when the house is sold.

Asked over 1 year ago - Austin, TX

We were foreclosed on and had a federal lien on the house. Now the IRS says we still owe the amount because the lien was not paid during the foreclosure.

Attorney answers (3)

  1. Robert E. Philo Jr.

    Contributor Level 12
    Best Answer
    chosen by asker

    Answered . If the foreclosing attorney gave at least 21 days' notice to the IRS (in proper format) prior to foreclosing and the IRS did nothing to stop the foreclosure, the IRS lien on your former house was released. However, the lien was not paid (unless someone bid in more than was owed to the lender) and will attach to another house should you buy one. That is until the amount owed to the IRS is paid. So, you still owe the IRS. But there are firms who have good success in negotiating with the IRS and reducing what you owe. You should contact one.

    Mr. Philo limits his practice to matters concerning real estate. By answering this question no attorney-client... more
  2. Gary Alan Armstrong


    Contributor Level 16

    Answered . I agree with the other answers. The IRS only gets paid if there is money in the sale over and above what the mortgage company needed to pay itself off. That's highly unlikely, though not impossible. An IRS lien attaches to all of your other assets, too. Depending on how old the debts are, you may want to visit with a bankruptcy attorney and/or a tax attorney about options. It may be that either a bankruptcy or an offer in compromise could resolve the tax debt for you.

    I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to... more
  3. Diane L Drain


    Contributor Level 15

    Answered . Not unless there was money over and above the amount owed to the foreclosing lender. Talk to a good tax attorney or CPA to determine if you have other options.

    This firm is in the business of helping people and companies file for bankruptcy protection. Therefore, the... more

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