The Tax Times: Can The IRS Foreclose On My Home To Satisfy A Tax Debt?

A Texas federal court has ruled that the U.S. government may foreclose on the home of a physician and his wife in El Paso to help satisfy over $2 million in unpaid federal income taxes. The case, United States of America v. Aranda et al., case number 3:24-cv-00394 in the U.S. District Court for the Western District of Texas, highlights aggressive enforcement where taxpayers fail to file or pay for extended periods.

Dr. Manuel Aranda Jr., a physician, and his wife, Melissa Marie Aranda, a realtor, accrued tax debts totaling approximately $2.1 million, including interest and penalties. The IRS asserted that the couple failed to file federal income tax returns or pay any federal income tax from at least 2013 through 2022. A federal tax lien was placed on their principal residence in El Paso in 2019, setting the stage for further collection action.

U.S. District Judge Kathleen Cardone granted a default judgment after the Arandas failed to respond to the government’s lawsuit. This judgment allows the government to proceed with foreclosure and sale of the property, with the proceeds to be applied to the outstanding tax liability. The court also awarded the government prejudgment interest at 7% from January and post-judgment interest until the tax debt is paid in full.

This Case Serves As A Cautionary Tale For Taxpayers About
The Risks Of Prolonged Noncompliance, The Reach Of
Federal Tax Liens, And The Possibility Of Losing A
Primary Residence When Tax Debts Are Left Unresolved.

The IRS requested additional relief, seeking to compel the Arandas to file annual tax returns and make estimated tax payments for five years going forward, but the court declined, citing limits on its injunctive authority. This outcome underscores the seriousness of defaulting on tax obligations and the broad remedies available to the IRS, particularly when standard IRS collection tools have been ignored or evaded over many years.

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