Posted on Monday, August 31, 2009
If the USA is joined in the foreclosure action, the lien can be extinguished. However, the IRS has a 120 day right of redemption. You can contact the US Atty in the controlling district and request a release or waiver of the right. They usually require payment in exchange for the release. If the purchase price in REO is enough to justify this payment, it is worth it. Some clients pay and get the release so they can sell out of REO without the redemption issue and some clients wait out the 120 days and then sell.
If the USA exercises their right, all they have to pay is the amount bid at the FC sale. That is why it is very important that the plaintiff/bank bid full judgment at the FC sale if the USA is a party, not the usual nominal $100 bid.