Tax Liens on Real Estate: Where is it Recorded?
First, be operation of law, a statutory Tax Lien arises once a tax has been assessed, demand has been made and taxpayer fails to pay. The lien is perfected by a Notice of Tax Lien, filed in the county of taxpayer residence.
The federal tax lien attaches to ALL the taxpayer’s property and rights to property regardless of location.
The IRS will typically only file the Notice of Tax Lien in the county of the taxpayer’s residence.
It is important to know that while the IRS may not file a Notice of Tax Lien in another county for which the taxpayer has a property, the Notice of Tax Lien in the taxpayer county of residence attaches to ALL property and rights to property, regardless if the Tax Lien was filed in that county.
A federal Tax Lien will typically only prevent you from selling a property in your county of residence.
If you own real estate in another county or state, will the IRS Tax Lien be picked up if the IRS has not filed in that county? Probably not! Remember, your place of residence is irrelevant to the effectiveness of the IRS Tax Lien against all real estate regardless where located.
Be cautious when selling real estate with an IRS debt. Just because they do prevent you from selling it does not mean it will not be considered a Dissipation of Assets. This would be the case if you use the equity in a manner other than paying the IRS. A ruling of dissipation of assets will depend on the facts and circumstances of the situation.
If the IRS files a tax lien in the wrong county, it may benefit you in the ability to sell real estate. However, it is important to handle the situation properly so as not to give the IRS a claim of dissipating assets.