My cousin just took over her mom's house, who recently died. The IRS has a tax lein on it. Income taxes were never paid.

Question

The daughter says that the IRS will not let her do anything with the house (sell, rent, fix up, etc). She says the IRS told her that she's allowed to stay there a few times during the week, but if a family member or friend wants to stay the night or a wknd, she would have to be present the entire time they are there. I'm asking this question because I have a situation where I need to be in Biloxi for 2-3 days in Oct and would love to stay in my Aunt's house during that time. My question is, could my cousin be mistaken about this or does the IRS really put these types of stipulations on properties that have tax leins on them? Does she really need to be present if we stay a few nights?

Jeffrey "Anton" Collins · Answer

The Federal Tax Lien is a legal tool the IRS uses to help secure and enable tax collection. Liens and other "security instruments" direct third parties to first use any proceeds (cash) from transactions to satisfy (pay-off) the associated debt. 
 
However, not all lens are enforceable. Also, liens are not typically used to manage or control the use of any property that is subject to the Lien. These facts, as presented, seem to be a misunderstanding of the IRS's actual control of the property.  
 
Perhaps there are more details to consider. I think your family would immediately benefit from consulting with a tax attorney that handles IRS collection problems.

James L. Arrasmith · Answer

It sounds like there might be some confusion about the restrictions the IRS places on properties with tax liens. While the IRS can place a lien on a property to secure unpaid taxes, the conditions you mentioned regarding who can stay in the house and when are unusual. Typically, a tax lien prevents the sale, refinancing, or transfer of the property without settling the debt. However, it does not usually dictate personal use or occupancy in such detail. 
 
The IRS generally doesn’t enforce rules on who can stay in the house as long as the property is not being sold or otherwise disposed of without resolving the lien. Your cousin may have misunderstood or misinterpreted the communication from the IRS, or there may be more specific circumstances affecting this case. It would be wise for her to clarify directly with the IRS or review any written notices to understand the exact terms of the lien. 
 
If you need to stay at the house, it might help to have a straightforward conversation with your cousin to ensure everyone is on the same page. Perhaps she could contact the IRS again for clarification or consult with someone knowledgeable in tax law. This way, you can all be certain about what is allowed without unintentionally violating any rules.

Q: My cousin just took over her mom's house, who recently died. The IRS has a tax lein on it. Income taxes were never paid.