IRS Liens

By: Mark D. Shapiro | Posted: 17th June 2015

Judgment debtors often have additional judgments against them and owe money to other judgment owners. Very often, the most ambitious judgment owner, the first to successfully collect, is the winner. State and Federal tax (abbreviated here as IRS) judgment garnishment actions outrank common judgment garnishments, so does a current or future IRS judgment against your judgment debtor mean it is game over for a common judgment creditor? Not necessarily.

My articles are my opinions and are not, legal advice. I am a judgment solutions expert, and not a lawyer. If you ever need legal advice or a strategy to use, please contact a lawyer.

The general rule is that all other things being equal, IRS levies beat typical creditor levies. When the IRS is already garnishing your judgment debtor's assets, your garnishment will not attach so you need to wait until they are done; and then try to recover whatever available judgment debtor assets which may remain.

If the IRS learns about your garnishment in progress and/or finally finds your debtor's available assets, you need to give up and allow the IRS to do their thing. The IRS will stop your current levy and start theirs, and add their fines and penalties as they garnish their judgment debtor's available assets; sometimes leaving very little left for other creditors.

Yet, an ambitious creditor, especially with a relatively small judgment, can garnish their debtor's assets before the IRS grabs them. If the IRS notices and learns of your current garnishment and asks for the money you levied or to do something, you need to comply right away; although this very rarely will happen.

When it comes to debtors with more than one judgment lodged against them, everything usually all depends on how ambitious the creditors on the other judgments are. Most creditors don't do anything, and when one judgment owner knows more about the recovery options and more ambitious in judgment recovery; who won the judgment first usually does not make any difference. Most often, the squeaky wheel gets the grease; and an example is the case of California Coastal Commission v. Allen 167 Cal. App. 4th 322.

One place where who's first counts is recording real estate liens on real estate which sell with some extra equity, most of the time, the first judgment creditor to record a lien gets paid. I.R.C. 6323 explains: "first in time, first in right". Exceptions do happen, especially in bankruptcy courts. For a common judgment creditor lien to beat an IRS lien the lien must get recorded before the IRS records their lien, and also be a "Choate" lien; which means it's a final lien situation, and the lien specifically lists what is attached.

Remember that the IRS can move ahead of a current typical judgment owner levy. One example would be if you have a current employment levy going, the IRS can move in so your levy will get put on hold, until the IRS is satisfied. Note that the IRS can bend the rules and laws to collect what is owed, check out http://www.lerchearly.com/publications/779-the-irs-may-priority-over-secured-lenders-tax-lien-levy-cases.

One more circumstance where regular judgment owners get burned is in bankruptcy courts. Legal fees, Trustee's fees, taxes, and other expenses are often paid ahead of your long-held property lien position. At bankruptcy courts, the big boys are paid first.


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Mark Shapiro of: http://www.JudgmentBuy.com - The fastest and easiest free way to find the best expert to recover or buy your judgment.
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