When Can a Court Use Its Discretion to Decline Foreclosure of Property Subject to a Federal Tax Lien?

When Can a Court Use Its Discretion to Decline Foreclosure of Property Subject to an IRS Federal Tax Lien? Judicial discretion to decline foreclosure in Federal tax lien cases is available, but very limited, under 26 U.S.C. § 7403. Courts have held it is available to protect a third party interest in the property when a variety of factors weighs in favor of exercising discretion and available whenthe value of the property had declined so that the equity of the property was depleted by lienholder senior to the government. The seminal case on this point is U.S. v Rodgers, 461 U.S. 677, 710-11 (1983). Rodgers held that the court could use discretion where necessary to protect the interest of a third party and listed factors to determine whether this limited discretion to not authorize the foreclosure should be used. Id. The Rodgers factors serve “to provide a framework under which it must justify a refusal to order a sale under § 7403.” U.S. v.…

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