Here Comes The Property Confiscation By The IRS. Govt Suspends SLUG Payment Due To Debt Ceiling.

You know how, when you own your home outright, if you don’t pay the property taxes on it, the govt can take your home

for back taxes?

Well, when municipalities issue bonds (borrow from the public) they have tax obligations with the IRS, and the Fed.

What are SLGS?

“Treasury Securities – State and Local Government Series” – also known as “SLGS” – are special purpose securities that the Department of the Treasury issues to state and local government entities, upon request by those entities, to assist them in complying with federal tax laws and Internal Revenue Service arbitrage regulations when they have cash proceeds to invest from their issuance of tax exempt bonds.

http://www.treasurydirect.gov/govt/resources/faq/faq_slgs.htm

Without making it too complex, the Federal govt loans money to the States and Munis so they don’t default on their tax obligations. If a State can’t pay their taxes, technically, ther IRS could confiscate properties funded by Muni bonds, like Stadiums, Schools, and Hospitals.

The US Treasury Department announced yesterday evening that it will stop the sale of state and local securities or “slugs.” The securities are used by states to comply with local tax rules. Ending the sale of slugs is the last measure the Treasury Department can take to avoid amassing any further public debt and stave off the debt ceiling while congress continues its budget dysfunction.

The suspension will go into effect on May 17.

http://civsourceonline.com/2013/05/16/debt-ceiling-debacle-ends-sale-of-state-and-local-securities/