Tag Archives: tax lien

Have IRS Tax Debt? Need a New Passport? The GAO wants to know.

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As of the end of fiscal 2010, the balance of reported unpaid federal taxes was about $330 billion according to the IRS. This is a huge amount and as we have written about in the past, the enforcement of the tax laws and the tax code is on Government Accountability Office’s list of high-risk areas.  The deficit being what it is it may come as no surprise that the GAO was asked to investigate, by cross referencing unpaid federal taxes and passport issuance, the magnitude of known unpaid federal taxes for individuals who were issued passports.  Selecting a past year, the GAO did a study for the fiscal year 2008 to identify examples of passport recipients who had known unpaid federal taxes.

They study discovered that individual states issued passports to about 16 million individuals during fiscal year 2008 and that of these, over 224,000 individuals (over 1 percent) owed more than $5.8 billion in unpaid federal taxes. That is JUST those individuals who got new passports in 2008 – not all passport holders.

Does that come as a surprise? Currently each state is not authorized to restrict the issuance of a passport to an individual because they owe federal taxes. In addition, federal law does not permit the IRS to disclose taxpayer information, including unpaid federal taxes to State officials unless the taxpayer consents. The reason this is at least somewhat surprising is that in contrast, federal law does permit certain other restrictions on the issuance of passports to individuals, such as for those individuals owing child support debts over $2,500.

Really, the problem is likely far greater than 1% of the newly issued passport holding population.  In addition to the obvious population balance of all valid passport holders for the studied year of 2008, the estimated amount of unpaid federal taxes was actually likely understated because it excluded individuals who had not yet filed tax returns or who had underreported income.

Making matters harder, individual States currently cannot compel a passport applicant to provide a Social Security Number (SSN). Because the IRS uses the SSN to identify each taxpayer, without an SSN you cannot match an individual back to their IRS data.

This study had produced such alarming results already and the GAO wanted to know a bit more. They took the 2008 study and dug deeper into the backgrounds of a very small group of just 25 passport recipients. Clearly this is a tiny study and cannot be reflective of the population as a whole. That said, some pretty interesting things were discovered.  When investigating for abuse related to the federal tax system or criminal activity, of these 25 cases, at least 10 passport recipients had been indicted or convicted of federal laws! In addition, the IRS had assessed trust fund recovery penalties on several passport recipients; a penalty which is applied when an individual does not remit payroll taxes to the federal government.  How does someone fall behind on Payroll taxes?  Instead of acting appropriately as the trustee of an individual employee’s withholding and forwarding it onto IRS, they divert the money for other purposes. Using payroll taxes is a big crime; in fact the willful failure to remit payroll taxes is a felony underU.S.law.

In this smaller study of the 2008, of those 25 new passport holders, some had accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, all while failing to pay their federal taxes. In fact, of the 25, at least 16 passport recipients traveled outside the country all while owing federal taxes and another 4 passport recipients actually resided in another country at the time! Worse yet, two individuals used the identities of deceased people to fraudulently obtain passports in the first place and then used the passports to travel toMexico,France, and Africa. Ironically in one case, the unpaid tax debt belonged to a deceased individual and in the other; the debt was actually incurred by the imposter.

If this small study is any indication, there appears to be a big opportunity to crack down on passport issuance for those who owe federal tax debt. Although nothing official has been implemented to date, Congress could pursue policy to link federal tax debt collection and passport issuance by enabling States to screen and prevent individuals who owe federal taxes from receiving passports.  This would require transparency and more communication between the IRS and the individual States, but it seems that the opportunity to collect unpaid tax debt would be greatly improved as a result.

 

If you have an unresolved tax debt, visit us today at www.professionaltaxresolution.com for more information about our customized tax settlement assistance. The CPAs and tax professionals at Professional Tax Resolution use their extensive knowledge of the tax code to provide taxpayers with the best settlement option available. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to learn more about our services and to receive a free, no obligation consultation.

Tax Lien and Tax Levy Facts – The Expert Advice You Need

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What is a Tax Lien?
A tax lien is a claim against one or more of a taxpayer’s assets. It is issued by the IRS or State Tax Agency for the purpose of insuring payment of a tax debt. The tax lien gives the issuing tax agency priority over other potential creditors with respect to the assets identified by the lien. A tax lien is one of the more aggressive steps in the enforced collection process and is usually issued when all other previous attempts to collect a tax debt have been ignored.

How Does a Tax Lien Differ From a Tax Levy?
While the tax lien is a claim against a taxpayer’s property, a levy is the actual seizure of that property. The levy is one of the final steps in the enforced collection process and is used only when a taxpayer has made no attempt to resolve an existing tax liability. Once a Final Notice of Intent to Levy has been issued together with an official notice informing the taxpayer of their right to a formal hearing, the property identified by the levy can be confiscated without further notification.

Under What Conditions Can a Tax Lien Be Withdrawn?
A tax lien can be withdrawn if it was not filed according to established IRS policies and procedures or if it will delay the collection of the tax debt in question. It can also be withdrawn if the taxpayer enters into an installment agreement to repay the debt identified by the lien or if it can be established that withdrawing the lien is in the best interest of the taxpayer.

When is a Tax Lien Released?
A tax lien is released when the tax debt identified by the lien is paid in full. It will also be released if the taxpayer enters into a formal agreement with the issuing tax agency for partial payment of the existing liability. These resolution options include, but are not limited to, an Offer in Compromise or a Partial Payment Installment Agreement. Once the tax debt is paid in full or one of the partial payment settlement plans has been accepted, the taxpayer must submit a formal written request that the lien be removed. Within 30 days of receiving such a request, IRS will issue a Certificate of Release.

What are the Recent Changes to Tax Lien Guidelines?
• The threshold for issuing a tax lien has been raised from $5,000 to $10,000.
• A lien will now be released once a taxpayer has entered into a direct debit installment agreement but after a probationary period to insure that the direct debit agreement is in place and working as planned.
• The qualifying criteria for an Offer in Compromise have been revised to include a larger group of taxpayers. The tax debt ceiling has been raised from $25,000 to $50,000 and the maximum annual income allowed has been increased to $100,000.

If you are the subject of a tax lien or any other type of collection activity by the IRS or State Tax Agency, our experienced professionals can help you stop the action and resolve the tax debt issue that caused it. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation

Tax Liens – How to Remove an IRS or State Tax Lien From Your Credit Report

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The most effective tool the IRS has for collecting tax debt are tax liens. What’s worse is that they are very difficult to get removed. Even after you pay off the tax debt, the tax lien will stay on your credit report for up to seven years. Only after they have expired will they be removed from your credit report. These five steps show how to get expired tax liens off of your credit report.

1. Get Your Credit Report: Each year you’re allowed one free copy of your credit report. There are many sites out there that offer this service, such as AnnualCreditReport.com. Use one of these sites to get a copy of your Equifax, Experian, and TransUnion reports.

2. Check for Errors: Yes, even the credit agencies can make mistakes. Carefully check your credit report. If a tax lien that has been paid for over seven years ago, and it hasn’t been removed, you are able to dispute the information with the credit reporting agencies.

3. Dispute: Sometimes, if you view your credit report online, you can dispute an erroneous item through the website. Otherwise, you may send an email or letter to the agencies with your dispute.

4. Send Backup to Prove Your Dispute: When you send your letter of dispute, make sure you attach documents that prove the tax debt was paid, and when.

5. Check Your New Report: The Credit Reporting Agency will reply with a new copy of your credit report after 30 days. The new report should reflect the changes.

Back tax issues can be overwhelming, but there is hope. A good tax settlement professional has the knowledge and experience to help you overcome these types of problems. If you need help with a tax debt issue, or just want to see what options are available to you, talk to one of the licensed experts at Professional Tax Resolution. We specialize in tax settlements and you won’t talk to a salesperson. Call us toll free at (877) 889-6527 or visit us at www.professionaltaxresolution.com today.

Tax Liens – How to Avoid Your Information Being Published

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In order to encourage compliance in the payment of outstanding tax debts, the California Franchise Tax Board is authorized to publish a list of the 250 largest state tax delinquencies in excess of $100,000. The list only includes amounts for which official tax liens have been recorded. Since the list is a matter of public record, the Tax Board is required to provide a written notice to the taxpayer before publishing their name on the list. Once an official notice has been issued, the taxpayer’s name will be posted on the list if the tax debt has not been resolved within 30 days.
As with all other official correspondence from the IRS or any State Tax Agency, a notice such as the one described above should not be ignored. Tax agencies are the most powerful collection agencies in existence and publishing a list of delinquencies is just one method they use to enforce compliance. Since there are always steps that a taxpayer can take to resolve any tax debt issue, the worst possible course of action is to ignore the problem. In the case of the California Franchise Tax Board’s tax delinquency list, a taxpayer’s name will not be included provided they contact the Board in an attempt to resolve the tax debt within 30 days of receiving official notification of the impending publication of their name. The list will also not include the name of a taxpayer who has either initiated or completed a verifiable bankruptcy petition, entered into an installment agreement with the collecting agency or had their tax debt officially identified as “not collectible.”

 

Click the “Learn More Link” or Call (949) 596-4143 to have one of our CPA’s provide a Free IRS or State Tax Lien Notice Review and Consultation.

States Offer Short Sale Assistance to Taxpayers

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When assisting clients with complicated tax settlements, taxpayers often find that the IRS and States have filed tax liens to protect their interests in back taxes owed. Tax liens can cause numerous problems, including damage to credit reports and also make the sale of property more difficult.

Many people, who are facing financial difficulties, are trying to sell their distressed homes for less than the loan balance in short sales. Often, during these transactions, there may not be enough value to pay the recorded state tax lien in full. This may delay, or even prevent, the sale of the home. (inboundrem.com) The State of California is one of many states that may be able to assist the taxpayer with a partial release of a tax lien.

A partial release of lien releases a specific piece of property from a recorded state tax lien, but does not release the lien in its entirety. The lien remains in effect against the taxpayer and continues to encumber other property the taxpayer owns or acquires in the future. The State of California estimates it can take up to 21 working days due to processing increased requests.

Clients seeking a resolution to complicated and large tax debts often face a variety of obstacles. The IRS and States, in recognition of the need to assist taxpayers, have begun to assist taxpayers in resolving these issues.  Complicated tax settlements require a tax professional that is aware of the various tax settlement options available from tax agencies.  Professional Tax Resolution can assist taxpayers in resolving even the most complicated tax settlements.