If a federal tax lien affects the property and if the Bank wants to take the property free and clear of the federal tax lien (subject only to the IRS’s right of redemption), notice of the intended sale mandated by the Internal Revenue Code must be given to the IRS at least twenty-five (25) days prior to the intended date of the foreclosure sale. Since the required notice must be given with respect to any tax liens on file thirty (30) days prior to the foreclosure sale, the Bank should ask the title company to re-check the federal tax lien status of the property thirty (30) days prior to the foreclosure sale, if a foreclosure certificate was issued prior to thirty (30) days before the sale and revealed no federal tax liens.
A timely notice to the IRS will result in the extinguishment of the tax lien by the sale subject, however, to the government’s 120 day right to redeem the property. An insufficient notice or no notice will result in the property being sold subject to the federal tax lien. A blanket notice to the IRS is not effective because one of the requirements-for the notice is that the lien be specifically identified. If the sale is pulled or postponed, a new notice to the IRS should be given at least twenty-five (25) days prior to the intended sale. See Form of Notice to IRS of Intent to Foreclose located at the end of this Chapter.