If you owe taxes can you buy a home with cash without the property being taken?

Question

I have a friend who inherited 10,000 he wants to buy a foreclosure with the cash. His concern is that he owes 20,000 in back taxes.

Answer 1

If you owe back taxes, then any of your assets can be taken for the taxes.  If you have a payment agreement in place and are paying regularly as agreed, your assets would normally not be attached, although any tax refunds would be taken toward what you owe.

Answer 2

The newly purchase property would be subject to the tax lien.  It may or may not be subject to seizure depending on the judgment of the tax agency employee working on the account.

Answer 3

If he owes 20K to the government, they government will first put a lien on the property and then if not action to pay back the 20K is taken then they will put a levy on the property where they can actually seize the property.

Best bet with your friend is to set up a payment plan with the IRS where he can make monthly payments with the IRS to pay back the amount owed and the IRS will not be able to place a lien or levy on any assets owned.  Only thing is, the minimum monthly payment will probably work out to about $600 a month because the amount needs to be paid back over a 3 year period.  But once an agreement is in place, the IRS cannot take property.

Here is a site with common problems with back taxes and solutions: http://www.backtaxeshelp.com .  I think the best bet is to contact a tax specialist to help set up an agreement with the IRS.  When taxes get over 10K it may be difficult to do it on your own. If your friend really wants to buy it, he better get some kind of agreement in place with the IRS prior to buying.