State Tax Liens

By: Paul Smith | Posted: 09th November 2009

The fact that each state has the duty to come up with its own tax regulations means that there are inconsistent tax procedures within the various states. This is the more reason why every careful tax lien investor will have to carry out a thorough investigation on what obtains in the various states if returns on invested are expected.

Different States Follow Different Procedures

There are so many confrontations that the tax lien investor will face from one state to the other. In most cases, these confrontations will be related to procedure as well as time limits. Therefore, if you have to invest in one state or the other, you must carry out thorough research to make sure that you are very skilled in all the various procedures. Remember that prudence is one of those qualities that will make you a good tax lien investor. In some cases, a situation may be feasible in which priorities of a state lien may have a way of right over that of a federal lien. This is a case if the tax that is claimed on the property comes from the same value of the property. This will still be possible even if a federal lien had been authenticated ahead of a state lien.

Why is there a need to study the various state's rules and regulations ahead of investing in tax liens? This is very necessary because what obtains in one state will not be the same as what obtains in another state. Keep in mind that each state has the freedom to legislate what it thinks reasonable in the collection of its taxes. It should be noted that the courses of action in the various states that will lead to investing in tax liens are not always the same. For example, some states prefer the system where the bid of the highest bidder in relation to the amount set on the lien takes priority over the remaining bidder while other states will prefer a system in which the bid with the lowest rate of interest has a way of right over the bid with the highest rate of interest. Remember that a period of grace will also be given to the taxpayer to redeem his debts, failure of which a foreclosure proceeding may be instituted against the taxpayer. As soon as this period of grace comes to pass, the rights to foreclosure of the third party will be the same as if this right had been conferred on the state authority.

The returns on state liens are also not the same. In places like Oregon, it can be as low as 5% and as high as 10% in places like Illinois. The period of grace given to the tax payer will also vary from one state to the other. In places like Nevada, it can be as little as four months. It can climb up to six months in Massachusetts and up to four years in the state of South Dakota.

Furthermore, the various states have certain times throughout the year in which lien sales can be done and this will equally vary from state to state. It is common for these sales to be held for a period of two month in a year.

You should also know that the conditions under which liens are sold will further vary from one county to the other. This is the more reason why every reasonable tax lien investor will carry out thorough research to verify what obtains in the various regions before investing in tax liens.

Trading Off Reason for More Profits

The above information is necessary to determine the measure of returns on investment that one would expect from investing in tax liens. There are so many investors who may care less about the above information and will prefer to get lower returns simply because they will want to avoid falling into any complex situation. Yet still, others will prefer the other way round.


Discover more about tax liens and competing claims as well as tax liens and the statute of limitations when you visit http://www.businesstaxlien.com, the top resource portal on IRS tax liens
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Tags: priority, highest bidder, priorities, freedom, rate of interest, investor, time limits, prudence, tax lien, confrontations