When a taxpayer loses a property in a seizure to satisfy unpaid taxes, they have the right to reclaim the property within 180 days of the sale. Individuals who have an interest in the property may also redeem it.

Taxpayers or other interested parties can reclaim their property by paying the successful bidder the purchase price plus a 20 percent annual interest rate. This interest rate is compounded daily, and the interest that must be paid depends on the days since the property's sale.

The IRS maintains a table of the interest rate for each day. For example, a taxpayer pays the purchase price plus interest 77 days after the property sale. This is an interest rate of 0.043082452 percent.

The taxpayer will have to get a certificate of sale from the bidder as proof the redemption occurred. They then have to notify the IRS that they redeemed the property.

As part of notifying the IRS, a taxpayer must provide the following information:

• Name and address of the taxpayer whose seized property was sold
• If a person other than the taxpayer redeemed the property, their name and address
• Name and address of the successful bidder
• Date of redemption and the Certificate of Sale's transfer
• The total amount paid to redeem the property, including a breakdown of the sale price plus interest

If the successful bidder is avoiding contact to prevent redemption, an interested party can instead pay the director for the Internal Revenue area in which the property is located.

Who Can Redeem Property

Individuals other than the taxpayer can redeem a seized property. Individuals with an interest in the property who can redeem it include:

• The taxpayer, their heirs, executors, and administrators
• Anyone who has an interest in the property
• Anyone who has a lien interest in the property
• Anyone acting on behalf of someone listed above

This guidance refers to federal tax seizures. State or local property tax seizures may have different guidelines for redeeming property.

If you have questions about redeeming property, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.