Federal Tax Lien

[deeter]

What is the name of your state (only U.S. law)? Texas

I am not sure if this is a tax question or a real estate question, but I will give the basic information and those of you that can offer advice can ask the necessary questions.

In 2007, my husband and I co purchased a house with my mom to move her from the Houston area to where were we live in the San Antonio area because she suffered stroke and needed to be closer to us. She was able to live on her own but because her income was not enough to cover all of her expenses, we supplemented what ever she needed above her small social security payments.

In approx. 2009 or so, my brother moved in with her, and as we found out after a while, he lost his job, and we supplemented him as well for a short time. He was a self employed in the electrical business for custom homes, and the market here tanked. He also got engaged around 2011, 2012.

My mom passed away in 2012 with no will, but also no estate. Only the house we co owned and 16K in the bank. Her funeral cost a little over 10K and we used the remainder to pay her debts and house payments. We were told we did not need to probate her estate at that time.

In 2013, we re financed the house and moved the title in to my husbands and my name solely. No issues came up at that time. We filed an affidavit of heirship and my brother also signed a general warranty deed for his interest in the house over to us. The house is worth less and 100K. Again, re financed with no issues. Lien was filed in 2010.

FF to today, my brother has been incarcerated on felony DWI charges, we have the house on the market and have an offer. The title company called late Friday afternoon and told us that we need a release of lien!! We had no idea. Apparently there is a lien for my brothers unpaid taxes in the amount of 103,000. For those of you that want to point out what a screw up my brother is, believe me, we know! We are no longer helping him in any way, and have cut them out of our lives. But, we are unsure what we need to do at this point.

Can we get the lien released since my brother never owned the home and was never listed on the title? Or do we need to hire an attorney at this point?

He and his fiance have filed "common law" marriage paperwork with the TDCJ so is she able to work this out on his behalf? She tells me he is not able to sign any paperwork, but I find that hard to believe. I am also curious how responsible she is for working out this situation since they are "married". If he is incarcerated is she able to act on his behalf to work this out?

I know this is long and rambling, and I will clarify any questions. I just want to know where to turn. We will not make more than a couple of thousand on the sale of this house, which is way more than we have put into it over that last few years, so we are not looking to make a buck. but if we cant get the lien released, we will probably have to pay alot to get out from under it. I am also worried that there may be a lien on my primary residence.

I have already tried to call the tax office and was on hold for over an hour until the offices closed and they cut me off. I will call again on Monday, but am looking for any insight.

Thank you in advance.

Deeter

 

[davew128]

Why does your brother's tax lien affect your sale of real estate? If he's not on the title to the real estate, why is this an issue? If he is somehow on the title, the chances of the lien getting released without payment of the debt are zero.

 

[Zigner]

Why does your brother's tax lien affect your sale of real estate? If he's not on the title to the real estate, why is this an issue? If he is somehow on the title, the chances of the lien getting released without payment of the debt are zero.

Because, had the property been properly probated, he would own a portion of it that is subject to lien.

 

[Ohiogal]

Because, had the property been properly probated, he would own a portion of it that is subject to lien.

Maybe but maybe not. How was the property titled? Tenants in Common or JTWRS?

 

[Zigner]

I have to step back a bit. OP said the lien was filed in 2010, but mom passed in 2012.

How was a tax lien filed on a property that the man had no interest in (at the time)? Yes, exactly how the house was titled may be an important part of this puzzle.

 

[anteater]

How was a tax lien filed on a property that the man had no interest in (at the time)?

Yeah, a very interesting question.

Yes, exactly how the house was titled may be an important part of this puzzle.

Apparently it was tenancy in common. Otherwise, this would not have been necessary:

We filed an affidavit of heirship and my brother also signed a general warranty deed for his interest in the house over to us.

Texas has some interesting ways to handle things outside of actual probate. An Affidavit of Heirship is one when there is no will.

 

[deeter]

Thank you so much for the replies.

He was never listed on the title. And the title company did not find this lien when we refinanced last year even though it was apparently filed in 2010. Now, the title is only held in my and my husbands name.

I can go back and see how the title was held prior to our re-fi. But my brother never was listed on the title to the house. He did sign a "common warranty deed" last year signing over any interest he may have had in the house over to us. Since my mom only owned half does that make a difference with the lien?

We were told that an affidavit of heirship was sufficient for our situation since there was no estate of value left after my mom passed.

Again, thanks

 

[tranquility]

Being "listed on title" is not really relevant; ownership is. How title was held is important as are the timing of everything. If brother had a tax debt and he transferred property he got through inheritance without compensation, the lien may very well be valid. The lien cannot cover more than brother's interest. However, even though it does not cover your interest, no one will buy the property with a lien on any portion of it--especially one so large. Who but the owner would want to go through the legal and administrative hassle and expense to perfect title?

I think you will need a tax attorney or someone who specializes in (tax) collection activity to sort this out. There is probably not going to be a phone call to the right person that takes care of everything for this sale. You will probably lose the current sale. If you bring together all the facts, you might have some issues with title insurance that might get them on board. (Depending on what types of insurance you purchased.)

 

[deeter]

After many phone conversations today, I have been told that the laws for affadavit of heirships have changed since 2012. I will have to see if the IRS will accept that along with some other info from the title company.

But, it looks like worst case will be we will have to pay 1/2 of 1/3, which would have been my brothers interest in the house through inheritance. Hiring a tax attorney will cost a lot more than the small profit we will make on the house. If that will get us out from under it, that it what we will do. Guess I will have to spend the day at the IRS office to see if I can work it out, if not, it looks like we will have to hire an attorney.

Thank you all for the replies and the additional information for me to look at. I hope this will resolve quickly.

 

[Zigner]

Again, how was a lien placed on a property in which (in 2010) the man had no interest in?

 

[davew128]

Guess I will have to spend the day at the IRS office to see if I can work it out, if not, it looks like we will have to hire an attorney.

I don't think you understand. This is your BROTHER'S tax lien. While it has apparently attached to property YOU have ownership of, YOU can't get it released. The IRS won't talk to you unless you get a tax power of attorney signed by your brother (which you CAN get despite not being a tax practitioner) though I wouldn't advise it.

 

[davew128]

Again, how was a lien placed on a property in which (in 2010) the man had no interest in?

It wouldn't, but it WOULD attach to any property he acquired after the lien was filed, including any interest in real property by way of inheritance. Quite honestly, a Texas attorney who is familiar with IRS collections and Texas probate law would be the best bet here absent paying the IRS the money from the sale.

 

[LdiJ]

It wouldn't, but it WOULD attach to any property he acquired after the lien was filed, including any interest in real property by way of inheritance. Quite honestly, a Texas attorney who is familiar with IRS collections and Texas probate law would be the best bet here absent paying the IRS the money from the sale.

I could see this being a mistake. I could see brother filing out information forms as "owning" the home even though it was other family members who owned it...and the IRS just going with that.

However, I disagree that the OP cannot address the issue with the IRS. She would be addressing it by asking the IRS why they have a lien against her home when she and her husband owe no back taxes. In addition, if the ownership was JTWROS while mom was alive, then brother never could have inherited any part of it.

 

[tranquility]

After many phone conversations today, I have been told that the laws for affadavit of heirships have changed since 2012. I will have to see if the IRS will accept that along with some other info from the title company.

But, it looks like worst case will be we will have to pay 1/2 of 1/3, which would have been my brothers interest in the house through inheritance. Hiring a tax attorney will cost a lot more than the small profit we will make on the house. If that will get us out from under it, that it what we will do. Guess I will have to spend the day at the IRS office to see if I can work it out, if not, it looks like we will have to hire an attorney.

Thank you all for the replies and the additional information for me to look at. I hope this will resolve quickly.

It is NOT going to be resolved quickly. The IRS is NOT going to accept 1/2 of 1/3 of what you think you are going to make from the sale to release the lien. They might accept 1/2 of 1/3 (If that is the actual ownership amounts that can be proven.) of the ENTIRE SALE PRICE. YOUR refinancing is not really interesting to them. Any prior debt on the property may be, but it would have to be proven and documented and a part of the package presented to remove the lien.

if the ownership was JTWROS while mom was alive, then brother never could have inherited any part of it.

This is the only way I see the IRS letting the OP resolve this quickly. "Quickly" being a relative term. The only time I have seen sales still go through with an IRS lien on the property is when someone comes up with the money. Otherwise, the liens do not seem to be cleared before the sale falls apart.

There is a mess here. That mess should be able to be cleared up by a person with experience and knowledge and a good factual basis to proving up the lack of equity ownership by brother. But that will take some time and money.

 

[deeter]

It wouldn't, but it WOULD attach to any property he acquired after the lien was filed, including any interest in real property by way of inheritance. Quite honestly, a Texas attorney who is familiar with IRS collections and Texas probate law would be the best bet here absent paying the IRS the money from the sale.

I have no idea how it was placed on the property back in 2010, I didn't know anything about this until Friday afternoon. As I said earlier, another glitch in this whole situation is that my brother is incarcerated.

Since I obviously know nothing about any of this, I am in the process of looking for an attorney to consult.

Thank you all for your help.