Forced Sale of Personal Residence for Delinquent Taxes

Is this an administrative seizure of personal residence (which requires court approval) or a judicial foreclosure of the tax lien? Either way, there must be equity for the Service to proceed, else there is no collection potential. Lots of good seizure info here:

closely at the Will Pay, Can't Pay, Won't Pay factors. I'd guess this is an uncooperative taxpayer with a history of non-compliance, or a last chance effort to protect the collection statute.

Paultry:

Thanks for the info.He was an uncooperative taxpayer who for years had a large tax debt AND an even larger debt to medical providers because of his (now) late wife's long illness and death.

The case was already in Federal Court on an Order to Show Cause Why The Court should not order the sale of his home when I was retained 11 months ago.Since then my client has cooperated 100% (supplied financials, applied and was rejected for a Home Equity loan, applied and is about to be rejected for a Reverse Mortgage, etc.).

The Government (Department of Justice probably taking its cues from the IRS) refuses to settle the litigation in any way despite the fact that he has fully cooperated and has nothing (and can get nothing). I am mystified because if I had been his rep. before the case was forwarded to Court--i.e., when it was still in the administrative collection mode--it would have almost certainly been CNC'd by now.

I just served massive Discovery on the Government to get their Files to try to find out why they want this guy out on the street. The Judge appears (informally) sympathetic but DJ will not back off at all. It's why I reached out to you learned folks!!!

Again thanks for any help or experiences.

The personal residence seizure process is much like a freight train - slow to get up to speed, but hard to stop when it is moving. Now that it has progressed to Court, the Service and Justice are not likely to back down.

Is the taxpayer's inability to borrow due to lack of equity, or poor credit and inability to pay? I'd want to see the Revenue Officer's case history, specifically the property's equity determination. Given the current real estate market, it may be worthwhile to secure a current, professional appraisal to establish fair market value (something the Service probably has not done.) Forced sale value will usually be set at 75% of FMV. If encumbrances senior to the tax lien equal or exceed that, they'll be hard pressed to justify seizure. If sufficient equity exists, and you can't find any procedural errors, it may be too late to help the taxpayer.

As always, the taxpayer must be in full compliance with all business and personal tax filing, depositing, and estimated payment requirements to have any negotiating ability.

Chapter 13 would stop the seizure, but it sounds as though you've already ruled out the ability to fund a repayment plan.

Paultry:

Again thanks for some highly focused ideas. I referred the client to a Bankruptcy attorney for a bankruptcy consult and the attorney (very experienced especially in whether bankruptcy will or will not help a client with concomitant tax debt) concluded bankruptcy would not be suitable for these facts.

Client's inability to borrow seems to be a combination of lack of equity and horrendous credit. The guy is a hard working guy was devastated emotionally and financially when his wife died after a long illness. He just couldn't get it together taxwise and then fell way behind.

Into his life (before I was retained) walked one of the most vicious-- i.e., borderline illegal--revenue officers in the area. A total take no prisoners guy and not in a good way.

As part of my Discovery I want this jerk's personnel file because I am certain (first hand knowledge and his less than sterling reputation in the tax defense bar locally) that the File will show him to be a very impeachable government witness (it was he who proposed the sale of the home and affirmed that he had followed the law and taken all other required steps). Highly doubtful.

Thanks again I'll look closely for the analysis of equity pages in the File (if I get it--Government was to give me NOTHING arguing "this is not a regular civil case--Order to Show Cause--therefore Discovery does not apply AT ALL!!).

Thanks again.