If you lost your home because of a tax lien or other tax matter, and the tax authority collected the debt by selling your home, there might be leftover profit from that sale that you are entitled to. How can you collect that if you don’t have an address?

**** The information written here is not legal advice and the author of this blog is not your lawyer.  These posts merely contain ideas to help you plan and organize your legal research and identify potentially helpful sources of law. ****

Property tax sales are generally conducted by the municipal or county governments that collect property taxes. This means that it is necessary to look in the municipal or county code to find the rules about when and how properties will be sold to pay-off a property tax debt.[i] The phrase “tax sale excess proceeds” will likely be the heading for the rules section about money owed to the homeowner after the house is sold to pay the tax debt.

The rules will establish a schedule for property tax sales. Perhaps the town or county only has one property tax sale every quarter. Maybe property tax sales occur on the last Friday of the month. Usually, the schedules establish a short enough time within which to sell the home that the person who lost the home can still be located. Knowing that there is likely to be money coming from the sale of his home, a newly homeless person must remain in contact with the agency (probably the sheriff’s department) selling the house.

Note that even though this question is about losing a house because of a tax debt, the same legal analysis works with any debt in which a house was collateral. If the house is taken away to pay debt and is then sold by the creditor for more than the amount of money owed, the debtor is supposed to get the leftover money. The legal right to collect those proceeds does not always come from any particular law. It is a simple common law principle of debt law that the creditor is only entitled to the amount he is owed.[ii] Some states might have this principle included in their statutes. Some agencies such as state departments of revenue or banking might include it in their separate regulations. Whether it is written in the law or not, this principle still holds true.

In the hassle and confusion of losing the house and trying to get re-established elsewhere while dealing with the financial papers and tumult, anyone might lose track of procedures. It is easy to understand how someone in these circumstances might not recall who to go to for a refund. In most states, the treasurer’s office keeps track of “unclaimed property” – a fancy way of saying money that rightfully belongs to citizens whom the government cannot locate.[iii]

“Unclaimed property” might be these excess proceeds from creditor house sales, unclaimed stocks, old certificates of deposit, neglected bank accounts, money from insurance policies, and more. Anyone who can use the Internet can search the state treasurer’s unclaimed property database.  A claimant can write a letter to the state treasurer instead filing a claim online. State agencies do understand that for many people the Internet is hard to use or is not available

In many states, simply finding the unclaimed property listing on the Internet is only the first step toward getting it back. There is usually a form to submit, a signature to be notarized, and that ever challenging proof of identity. As in dealings with the federal agencies, it is generally feasible for a homeless person dealing with the state treasurer’s office of unclaimed property, to either use a street address where he doesn’t live but can receive mail or to prove his identity with the help of social service agencies where he is known as a client.

[i] Here are some examples of tax office notices to homeowners whose houses are sold to pay off tax debts:
– Brazoria County, Texas

The sale of property for delinquent taxes may generate excess funds over and above the amount of judgment.  These funds must be turned over to the clerk of the court issuing the order of sale for safekeeping.  The retention period is two years from the date of sale.

Once the District Clerk’s Office receives the excess proceeds from a tax sale, a certified letter will be sent to the defendant within 31 days of receipt. To release the money, we must have a court order signed and dated by the presiding judge. The payor’s name, address, the amount of money as well as the person to whom the check is to be made payable must also be provided within the order.
Sierra County, California
“If the property is sold, lien holders and the former owner may claim proceeds in excess of the taxes and costs of the sale.”   http://www.sierracounty.ws/county_docs/collector/faq2012.pdf
“If the proceeds of the sale of tax-foreclosed property exceed the total of unpaid and delinquent taxes, penalty, interest, and costs, the municipality shall provide the former owner of the property written notice advising of the amount of the excess and the manner in which a claim for the balance of the proceeds may be submitted. Notice is sufficient under this subsection if mailed to the former record owner at the last address of record of the former record owner.” Title 29 Alaska Statutes Chapter 45 Section 480.
http://touchngo.com/lglcntr/akstats/Statutes/Title29/Chapter45/Section480.htm (Site not published by the state of Alaska.)


[iii] State unclaimed property offices are listed at http://www.unclaimed.org/. (Enter as an “owner.)The federal unclaimed property office (where you can find out about pension funds, mortgage interest refunds, etc…) is at http://fms.treas.gov/faq/unclaimed.html.

If you earned money this year, but you don’t have an address to put on the tax return, do you still have to pay the taxes?

**** The information written here is not legal advice and the author of this blog is not your lawyer.  These posts merely contain ideas to help you plan and organize your legal research and identify potentially helpful sources of law. ****

Basically, anyone who earns more than about $12,000 (single)[i] during one year in the United States has to pay income tax whether he has an address or not. People can definitely earn enough money to owe income tax even though they cannot afford housing. Day laborers can certainly earn more than a few thousand dollars  in a year. Trust funds can pay someone more than the minimum taxable amount in a year.

An interesting definition relevant to the beginning of the tax return might cause a homeless person to think that income tax returns do not apply to them. While in most encounters with the Internal Revenue Service, people are referred to as “taxpayers,” the income tax returns refer to the person responsible for the form as “head of household”– defined in the tax code as someone who “maintains as his home a household which constitutes for more than one-half of such taxable year the principal place of abode, maintaining the household during the taxable year is furnished by such individual.”[ii] This definition is only meant to distinguish between the tax liabilities of people paying for the household and the people who are dependent on the ones paying for the household, not to exempt people living without a household. There is no section of the tax code establishing that a household has to be a set location, certainly not one with an address.

The first equation taxpayers figure for their tax returns is the amount of gross income which the IRS defines as “all income from any source.”[iii] Gross income includes money in hand as well as interest on financial accounts, prizes, and possibly Social Security payments- depending on the taxpayer’s circumstances. Generally, Social Security payments are not taxed if they are the only source of income. But, if the taxpayer owes taxes from previous years, Social Security payments can be garnished to pay off that tax debt.[iv]

[i] Internal Revenue Service filing requirements as described in the IRS chart of Filing Requirements for most taxpayers.  http://www.irs.gov/publications/p501/ar01.html#en_US_2010_publink1000220675

[ii] 26 CFR Subtitle A, Chapter 1, Subchapter A, Part 1, §2(b)(1)(a).

[iii] 26 CFR Subtitle A, Chapter 1, Subchapter B Part 1, §61(a).

[iv] For a general discussion of this, see Tax Topics – Topic 423 http://www.irs.gov/taxtopics/tc423.html. For full details see IRS Publication 915 regarding Social Security and Railroad Retirement Benefits http://www.irs.gov/publications/p915/index.html.