How to Buy a Tax Lien Certificate: 1. Steps (with Pictures)Expert Reviewed. Three Parts: Getting Started. Finding Liens for Purchase. Purchasing the Lien.

Community Q& AA tax lien is often filed by a local government against a property owner who has failed to pay property taxes. The government agency involved will issue a public certificate stating the amount of unpaid taxes and verifying that a lien has been placed on the property. Often the agency will elect to sell such a certificate to a private investor in order to get some of the money due them without having to pursue the property owner. If the property owner later pays the tax (with interest), the payment goes to the investor. As with any investment, there are risks in buying lien certificates. If you're considering this type of investment, keep the following information in mind.

Owe back taxes? Collection agencies may have your number. By Alex Richards and Brad Wolverton/Nerd.

· Beware: The IRS and State Department will soon begin a new program targeting people who have delinquent tax debt.

Wallet. If you’re far behind on paying federal taxes, get ready to be muscled by private collection agencies. The IRS has hired four companies to go after long- delinquent taxpayers — often poor people — by using tactics forbidden to government employees who pursue unpaid taxes.

The IRS’ own Taxpayer Advocate Service and other critics warn that private collectors often resort to deceptive methods, forcing people of little means to make choices that can be financially disastrous. One of the four private agencies going to work for the IRS was discharged by the U. S. Education Department two years ago amid department allegations that the company used misleading tactics while trying to collect student loan debt. But advocates of the IRS outsourcing, including congressional leaders who approved it in 2.

IRS uses most of its resources going after major tax delinquents and does not have the personnel to pursue everyone who has long- due taxes. They say the collection agencies, which begin work this week, will be monitored to ensure they follow strict rules of conduct. Outsourcing failed before. Congress insisted on the use of private collectors despite the failure of two similar outsourcing programs over the last two decades. Each cost the Treasury Department more money than it received in overdue taxes. The last time, starting in 2.

The IRS eliminated the program three years later after losing about $4. Taxpayer Advocate Service, an independent organization within the IRS. Sen. Charles Grassley, R- Iowa, a former chair of the Senate Finance Committee, has disputed the Taxpayer Advocate’s analysis, arguing that it was not a fair accounting. He called for the IRS to continue outsourcing collections. Lawmakers argue that private companies have more resources and different tools than the budget- strapped IRS. Those include allowing collection agencies to target tax delinquents by phone, something the IRS has never done.

Debt collectors will be required to comply with the Fair Debt Collection Practices Act, which is designed to curtail abusive or deceptive behavior. The IRS says it will review the companies regularly and examine the taxpayer complaints that the companies are required to report. Critics say collection agencies have been known to call delinquent debtors six or more times a week, give inaccurate information and use dubious methods to force payment.

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Another fear is that taxpayers won’t know the difference between callers the IRS has approved and con artists threatening arrest, deportation and other outlandish consequences for not paying up. The IRS has warned about such scams, calling them a “major threat” to taxpayers. AARP says it has fielded thousands of phone calls in recent years from people complaining about IRS imposters.

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Intelligent Investing Ideas from Forbes. This is a junk state issuing junk bonds to pay delinquent. Remember what happened to Detroit and watch the. · Despite the fact that credit card delinquency has become increasingly commonplace over the past few years, many people’s understanding of it remains.

They get you because people are afraid of the IRS,” says Kristin Keckeisen, campaign director for the association’s Fraud Watch Network. If you owe taxes and are called by a debt collector claiming to work for the IRS, you should verify the phone number with the IRS, Keckeisen says. And if you’re the target of an unscrupulous collector, you can report the company to the IRS and demand in writing to have direct contact with the agency. Nerd. Wallet has also detailed other ways to protect yourself from collectors.)Collection agencies benefit. Two of the companies, Pioneer Credit Recovery and Con.

Serve, are in the home state of the chief advocate for outsourcing the work: Sen. Charles Schumer, D- N. Y. Schumer is a longtime proponent of privatizing tax collection, in part because of its benefit to collection agencies. He said the IRS contract is expected to help Pioneer and Con. Serve add a total of some 6. Navient, Pioneer’s parent company, gave $4,0. Schumer last year, according to Federal Election Commission filings. Watch Catch That Kid 4Shared more.

Since 2. 00. 2, Schumer has received at least $3. Navient, its predecessor Sallie Mae, its subsidiaries and their employees. Schumer’s staff did not respond to requests for comment. The four debt collection companies — which also include Iowa- based CBE Group and California- based Performant — will be allowed to keep about 2. The IRS also gets 2. Treasury Department. Pioneer has done similar work for the U.

S. Department of Education but was dropped from its roster in 2. The Education Department paid Pioneer about $1. But the department terminated its contract after alleging the company misled student loan borrowers about the benefits of repaying. The Consumer Financial Protection Bureau and attorneys general in two states have also sued Navient and Pioneer, accusing them of similar problems. Pioneer denies that it did anything wrong and has appealed its dismissal by the Education Department. The company says it is a leader in enrolling borrowers in income- driven repayment plans and has helped nearly 2.

Pioneer says the allegations by the CFPB and the attorneys general were not based on evidence of harm. Pioneer also was part of the IRS’ last experiment with outsourcing collection of back taxes under a program that was viewed critically by consumer advocates and some lawmakers. In 2. 00. 7, about a year after Pioneer and the CBE Group started collecting tax debts, then- U. S. Rep. Charlie Rangel, D- N. Y., held a hearing to investigate. Among the topics: domineering methods used by companies when dealing with taxpayers over the phone.“[W]e are not selling Florida swampland here and taxpayers are not marks,” Nina Olson, leader of the Taxpayer Advocate Service, testified at the hearing.

An internal Pioneer document discussed at the hearing instructed call center workers to encourage taxpayers to borrow cash to pay their overdue tax debt, including taking a loan from a private bank, cashing out their 4. Some of those options, like taking out personal loans, could drive people further into debt. Pioneer’s training materials introduced at the hearing also instructed collectors to tell taxpayers their money was due immediately and then ask them for a solution. The collector was supposed to follow that question with a “psychological pause” — silence the taxpayer would feel compelled to fill with a payment offer or information about their finances. Materials reviewed at the hearing also showed that other companies working for the IRS directed collectors to use a psychological pause, with one characterizing its effect bluntly: “The next person to speak loses.”Pioneer parent Navient says the IRS approved the scripts its collectors used during the calls and noted that those scripts no longer include description of a psychological pause. New problem could be created.

The IRS said Tuesday that it plans to hand over hundreds of delinquent accounts to Pioneer and its fellow collectors starting this week. The program will continue to ramp up over the spring and summer. The Taxpayer Advocate Service has estimated that some 3. It’s not clear how much better the companies will fare than the IRS did at collecting money.

Many of those accounts belong to low- income families. For those with a recent tax filing, about 4. Taxpayer Advocate Service. If enough people with old debts turned over to collectors elect to work directly with the IRS instead, it could create a new problem for the Treasury Department, a loophole left unaddressed since the last time the IRS outsourced collections: The agency has no staff lined up to ensure that taxpayers make good on these old debts.

Accounts returned to the “inactive” pile won’t help the companies or the government’s bottom line, and the transfer could embolden the most delinquent taxpayers. If they think the IRS is no longer on their trail, they might never pay their bill.