FREQUENTLY ASKED QUESTIONS RELATED TO AN INTERNAL REVENUE SERVICE SALE

QUESTION: How is the sale conducted?

ANSWER: The sale is an open, public auction conducted by the Internal Revenue Service auctioneer (the Property Appraisal and Liquidation Specialist). The auctioneer will open the bid price at or above the minimum bid of $71,700.80. Generally, bidding will proceed in even increments as determined by the auctioneer until the property is awarded to the person bidding the highest amount. Mail-in bids will also be accepted for this sale, and the auctioneer will bid for any mail-in bidders. If you want to mail in a bid, please see the mail-in bid form for instructions.

QUESTION: If I am the successful bidder, what happens then?

ANSWER: After the sale, you will have one hour to pay the auctioneer 20% of your bid amount in the form of cash, certified check, cashier’s or treasurer’s check or by a United States postal, bank, express, or telegraph money order made payable to the United States Treasury. Any balance of the amount you bid must be paid in the form of certified funds made payable to the United States Treasury on or before July 16. 2012, and mailed to Kathryn Clark, Property Appraisal and Liquidation Specialist, at 55 South Market Street, HQ 5410, San Jose, CA 95113. Upon receipt of the full amount of the bid price, the Internal Revenue Service will provide you a Form 2435, “Certificate of Sale of Seized Property”. This certificate is your evidence of the sale of the property by the Internal Revenue Service to you, the bidder. If the County permits the recordation of this document, it is recommended you do so.

QUESTION: Is the property then owned by me to do what I wish to do with it?

ANSWER: The taxpayer, his heirs, any lien holder of interest or any other person with a legal interest in the property has a right to redeem, or buy back the property, within 180 days after the date of sale by the Internal Revenue Service. If the property is redeemed, the person redeeming the property must pay you the bid amount plus interest on that amount at a rate of 20% per year prorated for the actual number of days from the date of payment to the date the property is redeemed.

QUESTION: During the 180-day redemption period, may I collect rent if there are tenants? May I improve the property? May I evict any tenants and move onto the property myself? Is there anything I can do with the property?

ANSWER: The taxpayer and others of interest have a right to redeem the property and any action is dependent upon state law. Therefore, you should contact an attorney or legal representative for this type of advice. The Internal Revenue Service will not advise as to actions you may take against or upon the property.

QUESTION: What happens after the 180-day redemption period expires?

ANSWER: After the 180-day redemption period has expired, the Internal Revenue Service will provide the successful bidder a Quit Claim Deed issued by the Area Director of the Internal Revenue Service. The bidder must surrender the original Form 2435, “Certificate of Sale of Seized Property” which was issued after the full payment of the bid price. After the redemption period, the taxpayer and others of interest do not have any redemption rights. The deed discharges the Federal Tax Lien from the property and places the title in your name giving you possession of the property.

QUESTION: Do I need to make payments to the mortgage holder, county tax collector, etc. during the 180-day redemption period?

ANSWER: Any payment of expenses related to the property may or may not be recoverable if the property is redeemed. This is dependent upon the state law in which the property is located. The Internal Revenue Service does not give advice related to this issue.

QUESTION: Will the encumbrances against the property still remain after the Internal Revenue Service sale?

ANSWER: Any encumbrance that is recorded prior to the Internal Revenue Service Federal Tax Lien attaches to the property and must be dealt with by the purchaser at an Internal Revenue Service sale. The Internal Revenue Service does not pay these expenses. Even when a property tax becomes due and payable, the Internal Revenue Service does not pay this obligation. The encumbrances that are recorded after the filing of the Internal Revenue Service Federal Tax Lien and the Federal Tax Liens are discharged from the property when the deed is issued.

There is a superior lien to the State of Hawaii Department of Taxation in the amount of $3,299.20 which the successful bidder must pay directly to the State.