Warning: State Department May Deny Passport Renewals And Applications If You Owe The IRS

Taxpayers who are seriously behind on their taxes to the IRS are putting their passports in jeopardy!

Fixing America’s Surface Transportation Act

Under the Fixing America’s Surface Transportation Act (“FAST Act”), signed into law in December 2015, the IRS is required to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Which Taxpayers Are Impacted By The FAST Act?

Taxpayers affected by this law are those with a “seriously delinquent tax debt”.  A taxpayer with a “seriously delinquent tax debt” is generally someone who owes the IRS more than $51,000.00 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy. The IRS announced that it is implementing this provision in the law staring January 2018.

How Can Taxpayers Avoid Notification To The State Department?

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Taxpayers Not At Risk For Loosing Passport Privileges.

A passport will not be at risk under this program for any taxpayer: 

  • Who is in bankruptcy,
  • Who is identified by the IRS as a victim of tax-related identity theft,
  • Whose account the IRS has determined is currently not collectible due to hardship,
  • Who is located within a federally declared disaster area,
  • Who has a request pending with the IRS for an installment agreement,
  • Who has a pending offer in compromise with the IRS, or
  • Who has an IRS accepted adjustment that will satisfy the debt in full.

Also for taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Timeframe And Process To Get IRS Clearance For Passport Renewal Or Application

When a taxpayer applies for a passport (either original issuance or renewal), the State Department, in general, will provide the applicant with 90 days to resolve their tax delinquency with the IRS before denying the application. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application so that the IRS has adequate time to notify the State Department.

The remedy for a taxpayer who believes that a certification to the State Department of a tax delinquency is erroneous or that the IRS incorrectly failed to reverse a certification because the tax debt is either fully satisfied or ceases to be a “seriously delinquent tax debt”, is to file an action in Federal District Court. However, taxpayers in this situation may be able to reach resolution within the IRS with the assistance of qualified tax counsel and thus avoid the delay and expense of bringing an action in Federal District Court.

What Should You Do?

If you have outstanding liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to travel by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Walnut Creek and elsewhere in California are highly skilled in handling tax matters and can effectively represent you at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

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Income Tax Evaders May Still Face Big Fines And Up To Five Years In Jail After Coming Forward

Tax cheats cost the government real money from the lost revenue and the costs associated with enforcement and collection of unpaid tax liabilities. On the Federal and State levels, enforcement of the tax laws is a priority task to ensure that everyone is paying their fair share. Recently, the South Carolina Department Of Revenue (“SCDOR”) charged 30 employees of the Boeing Company with tax evasion over several years going back to 2011. The employees voluntarily turned themselves in to SCDOR investigators but are still faced with the prospect of hefty penalties and a five-year jail sentence for each charge.

The SCDOR Investigation
According to the news release from the SCDOR, the Boeing employees filed W-4 forms claiming exemption from South Carolina’s state income taxes. Apparently, during tax years 2011 to 2014, the workers claimed state tax exemptions although they did not qualify under South Carolina’s individual income tax guidelines. During the years in question, these Boeing workers also failed to file their state tax returns.

It is important to note that the workers received notices from SCDOR encouraging them to comply with the tax laws prior to issuance of arrest warrants. These Boeing employees were given several opportunities to rectify their tax problems but failed to do so. The tax liabilities ranged from $4,000 to about $20,000 based on collective incomes exceeding $4 million. Boeing issued a statement saying that the company was aware of the employees’ tax issues and were proceeding with their own investigation. Aside from their tax troubles, these employees may face disciplinary action from their employer.

Understanding State Income Tax Regulations
The State of South Carolina collects income taxes from residents earning an income in the state. Residents who earn incomes outside South Carolina would pay state taxes to the second state. If that state does not collect income taxes, the taxpayer must pay state taxes to South Carolina as their residential state. Nonresidents who earn income from South Carolina employers must pay taxes to this state. The state does not use a separate withholding exemption certificate from the Federal Form W-4. Exemptions and deductions that are allowed on the federal form are accepted for the state tax returns. In general, employees who received a full refund of taxes withheld in the previous year and who anticipate no tax liabilities in the current year may claim exemption from state taxes.

Enforcement of state taxes varies depending on the prevailing tax code although the state Department of Revenue is charged with enforcement. The process and penalties may vary, so it is important to consult a tax professional when you are faced with any State as well as Federal tax liabilities.

What Constitutes Tax Fraud?
Tax fraud is the deliberate intent to avoid paying taxes through whatever means despite the taxpayer being fully aware that taxes are lawfully due.Tax fraud may trigger penalties under the definitions of Title 26 in the Internal Revenue Code.
Specifically, Title 26 U.S.C. Section 7201 states that tax evasion is a felony that carries a penalty of imprisonment for at most five years or a $250,000 fine for each charge for every individual or a combination of fine and imprisonment along with reimbursement of court costs.

Tax evasion is an example of tax fraud. Tax evasion refers to all deliberate acts where taxpayers misrepresent their taxable income on their tax returns. This would include actions such as inflating expenses for larger deductions, strategically under-reporting taxable income or failing to file tax returns in a mistaken attempt to avoid paying taxes.

The Truth about Dealing with the IRS and State Tax Agencies
There could be any number of reasons why individuals choose to forego filing their tax returns. In the case of the Boeing employees, it is difficult to say what, if anything, made them believe that they could get away with non-filing and non-payment of state taxes for an extended period. It is safe to say that their end-game was not prison, but it appears to be heading in that direction. Looking at the amount of tax liabilities that each individual owed the SCDOR, it would have been much more sensible to comply with state tax laws. The tax dues were miniscule compared to the criminal penalties should they be prosecuted for tax evasion.

The existing tax code is based on the premise that taxpayers are willing and able to honor their tax obligations as upstanding citizens. As such, the IRS and the State revenue offices have programs in place to encourage taxpayers to voluntarily come forward to resolve their non-compliant status instead of waiting for tax agency notices or letters. Voluntary disclosure by taxpayers may count in their favor when the revenue investigator decides if the case merits criminal prosecution. The IRS also allows payment plans and in some cases, reduction of tax liabilities for low-income taxpayers.

Redemption for Non-filers
Tax laws may be rigid, but the IRS and State Tax Agencies do not exist to go after taxpayers who make simple and unintentional mistakes on their tax returns. However, blatant fraud that includes non-compliance with tax filing regulations over several years and ignoring tax agency notices will trigger an investigation and prosecution if for fraud charges. The tax agencies do not need to prove how much you actually owe in taxes to charge you with tax fraud and possibly secure a felony conviction.

If for any reason you failed to file tax returns or you need to amend any of your returns from the last six years, it is best to consult a tax professional to make sure that you are making the right steps. When you work with a tax attorney or a tax expert, you may not have to deal directly with the IRS or State Tax Agency. Your tax representative takes charge of requesting tax transcripts from previous years if you don’t have them anymore. If you owe taxes and are unable to make full payment at the time your returns are filed, your tax representative can negotiate a viable payment plan.

Don’t wait for the IRS or State Tax Agency to contact you if you have not been filing your tax returns or need to amend information submitted in previous returns. For your peace of mind, consult a tax professional who can guide you through the process to ensure a positive outcome and avoid prosecution.

How The IRS Can Make Your Business A Statistic

The Collection Division of the IRS composes of Revenue Officers whose job is to collect outstanding IRS liabilities from taxpayers as quick as possible. These Revenue Officers have access to intelligence collected by other divisions of the IRS and they will scope out your financial moves, and garnish your wages and other sources of income, and seize houses, cars and bank accounts.

The most common sort of collection case involves a small business that has fallen behind in payment of withholding taxes. A Revenue Officer’s inventory is brimming with cases like these. Revenue Officers are told to go out and use a firm enforcement image in collecting the outstanding IRS liabilities and also be mindful of statistics compiled by the IRS to measure the Revenue Officer’s effectiveness. The IRS will maintain statistics on seizures of property, levies conducted and case status including the shut-down of a business. So when a business continues to ignore the IRS or the business is not paying its liabilities as quick as the Revenue Officer would like to see, that Revenue Officer will now change his stance from collecting the tax to making the business a statistic by shutting it down.

Feuer Trucking Company Shut Down

If you think I’m exaggerating, listen to this true story of how the Feuer Trucking Company of Yonkers, New York, was closed by IRS agents. Two and a half years ago prior, Feuer’s owner admitted to his employees that the company was hauling more red ink than anything else. Feuer was two million dollars in debt – and half a million of that was owed in back taxes to the IRS. The taxes plus the heavy interest payments marked Feuer for bankruptcy.

To save their jobs, many of the employees got together and offered the owner $25,000 for the company. The owner accepted. Feuer Trucking began repaying its debts both to its creditors and to the IRS, negotiating installment payments of $3,000 a week to pay off back taxes while it continued to pay current taxes. But because of the high interest rates and penalties the IRS was charging on the old taxes – 26% – the IRS debt was growing faster than Feuer could pay it off. It passed $800,000.

Just before Christmas the IRS struck. Revenue Officer Donald Raftery seized the $60,000 in Feuer’s bank account, and notified Feuer’s customers to pay their bills not to Feuer, but directly to the IRS. He also demanded a down payment of $400,000 on back taxes. Feuer didn’t have it. So the next day a squad of IRS officers backed up by a small army of U.S. marshals, swooped down on Feuer. Pay up the $851,000 in back taxes, the officers barked, or we will seize and sell everything. Of course, Feuer still didn’t have the money, so the IRS Revenue Officer tagged everything in the office for seizure – including desks, computers and file cabinets.

Feuer’s office manager confronted Revenue Officer Raftery. “Mr. Raftery, do you recall in July that I told you what we were worth? I spelled it all out to you in black and white on paper?” Raftery agreed that he knew that Feuer, which leases its trucks and building, had less than 10% of the $851,000 in assets.” The office manager then inquired, ‘Why did you take this action?”. But the office manager did not get a response back from the Revenue Officer who just shrugged his shoulders.

The IRS eventually returned Feuer’s computers and desks, but kept the $60,000 it had seized from the bank account. Even more devastating to Feuer, the IRS did not return its Interstate Commerce Commission license to operate. Without a license, the trucks couldn’t legally go anywhere. Feuer was out of business. The IRS had shut down a company that was paying current taxes and paying its employees. Fifty workers were added to the unemployment dole.

No matter how you add it up, you would think that the government is losing by closing the company down.

You would think that this headline report on the blind-siding of Feuer was a shocking expose of an IRS action that turned fifty taxpayers into welfare cases. But the Feuer case is not a story in which an IRS agent has careened out of control or the bureaucracy has mistakenly made a seizure that is not cost-effective for the government. In fact, the IRS never makes calculations of whether closing down a firm will add or subtract from the Treasury’s balance.

The Revenue Officers of the IRS Collection Division are among the most powerful people in government. Ten days after demanding payment the IRS can seize a taxpayer’s house, car, land, or business for subsequent sale at public auction. They can serve a levy on a third party, such as a bank, an employer, or anyone who owes the taxpayer money. If they suspect you might skip town without paying they can seize right away. All of this can be done without a court order. And if they so desire they can file a Notice of Federal Tax Lien at the local courthouse, which freezes a taxpayer’s title to property and puts the IRS at the head of the line of creditors.

It is highly unlikely that Revenue Officer Donald Raftery when he shut down Feuer Trucking Company got in hot water with his bosses. They probably toasted him with champagne. Besides generating all that good publicity for the IRS, Raftery racked up some marvelous statistics. He seized a bank account, tagged property, shut a business down, and closed the case. I guarantee that the Feuer case had been a thorn in the side of the local IRS office. Group managers hate over-age cases like the Feuer case. They have to regularly file reports on why they continue to carry them in their inventory and send those reports up the chain of command. This makes the chain of command very angry because an over-age case is not a nice clean statistic they can file to show what a good job they are doing – and what’s worse is an over-age case implies that the network has gone soft. So the word goes out to close cases and build statistics.

The IRS is a law unto itself.

Everything the IRS did to Feuer is legal and the shutting down of Feuer Trucking Company was completely consistent with IRS policy. This report was not a mortal blow against the IRS by unveiling its tactics against Feuer Trucking. Instead, you should think of the report as free publicity for the IRS, opportunely placed just after the week most folks got their W-2’s in the mail and started to look their 1040’s over. The message is this: The IRS is a law unto itself. Watch out!

Not every taxpayer is treated equally by the IRS. Each group manager is allowed incredible latitude in interpreting the collection manual, a freedom that gives rise to cavalier and arbitrary methods of enforcement. The IRS looks like an unbeatable army, with intelligence divisions scoping out your financial moves, cracking troops of auditors probing your returns for weaknesses, and a corps of revenue officers winning the property battle by seizing houses, cars, and bank accounts. It should be no surprise that some of the best Revenue Officers have spent time in military service.

The IRS Revenue Officer typically shows up to a taxpayer’s home or place of business when the taxpayer is in debt to the IRS. This Revenue Officer will also make a personal visit to a taxpayer’s home or place of business in tax cases where a taxpayer owes the IRS employment taxes. The IRS Agent who comes to a taxpayer’s home or place of business is not making the personal visit to take a taxpayer satisfaction survey. The sole purpose is to collect money for the IRS. Regardless of how civil and pleasant the Revenue Officer initially appears to be – remember they are not there to be your friend – they want your money.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you have outstanding liabilities with the IRS or any State Tax Agency, stand up to them by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Is Social Security Taxable?

A classic case of the government giveth and the government taketh away.

One of the most common web-search phrases entered is this: “Is social security taxable”? The answer: It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people who earn more than $34,000 could see up to 85% of their benefits taxed.

Things are slightly different if you’re married. Married couples with a combined income of less than $32,000 won’t see their benefits taxed at all.

What If You Owe The IRS?

The Federal Payment Levy Program (“FPLP”) allows the IRS to levy 15% of your Social Security benefit payments to pay your delinquent tax debt. Mind you that the gross amount of the benefits is still considered as potentially taxable by the IRS.

Before your Social Security benefits are included in the FPLP, the IRS will send you a Final Notice Of Intent To Levy. This notice is only issued once and provides valuable appeals rights. You have 30 days from the date of this notice to make arrangements to pay your tax debt before the IRS will begin deducting 15% from your monthly benefit.

Keep in mind that the IRS is not just limited to levying social security benefits but can levy other sources of income, issue bank levies and file tax liens. Remember the IRS wants to collect its money as quick as possible.

The Final Notice of Intent to Levy and Notice of Your Right to A Hearing is your last warning before the IRS starts levy action. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. You do not want to ignore this notice.

Don’t Take The Chance And Lose Everything You Have Worked For!

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

IRS Strikes Out Darryl Strawberry For Outstanding Tax Debt

IRS to auction Darryl Strawberry’s deferred Mets salary. A minimum bid of $550,000 has been set for the January 20, 2014 auction which will offer a deferred compensation agreement that was part of Strawberry’s 1985-90 contract with the Mets.

Darryl Strawberry, the former MLB All-Star, New York Mets and New York Yankees star who has faced tax problems owes over $550,000 when totaling California state and IRS back taxes. Strawberry was well known as a home-run hitter with a large presence in the batters box.

Strawberry is well known for leading the Mets to a World Series win in 1986 and the Yankees to championships in 1996, 1998 and 1999. But when it came to the IRS – it was three strikes and he’s out!

In 1995, The New York Times reported that Strawberry owed over $100,000 in back income taxes (for underreported income of $411,250 between 1986 and 1990), and just recently The Detroit News reported that he owes over $550,000 in back taxes. The breakdown according to The Detroit News is as follows: He owes over $259,000 to the State of California (as a tax lien was filed in April), over $250,000 to the IRS (IRS tax lien filed in December 2008).

In November 2004, after being served with an IRS levy,  the New York Mets began sending the IRS almost all of the $8,892 in monthly deferred compensation Strawberry is owed under the Uniform Player’s Contract, to cover both his back taxes and current income tax withholding.

But this was still not enough for the IRS – you see one way or the other, the IRS seems likely to get all its money.

The Internal Revenue Service is now auctioning the deferred compensation agreement that was part of Darryl Strawberry’s 1985-90 contract with the New York Mets to satisfy taxes owed by the former All-Star outfielder to satisfy IRS tax liens for 1989, 1990, 2003 and 2004.

The IRS said the agreement is worth about $1,279,000. The minimum bid is $550,000 in the auction which is scheduled for January 20, 2014 at the IRS office in Fairview Heights, Illinois. But if you are looking to bid, include a payment of 20% of the minimum and be prepared to pay the remainder within 60 days of the bid’s acceptance.

When Would The IRS Or State Tax Agency File A Tax Lien?

The IRS or a State Tax Agency will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount. For IRS under the IRS’s Fresh Start program, the lien threshold was increased from $5,000 to $10,000.

The Notice of Federal or State Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Alternatively, a new lender should be willing to make the new loan where the IRS and State Tax Agency agrees to subordinate its lien. A taxpayer can request that the IRS and State Tax Agency subordinate their liens to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS and State Tax Agency agree to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property.

Federal Tax Liens Do Not Necessarily Have To Remain In Place While You Are Under A Payment Plan.

It is true that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full. You must enter into a Direct Debit installment agreement and also meet the following to request that the Federal Tax Lien be withdrawn:

  1. The current amount you owe must be $50,000 or less;
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible;
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier;
  4. You must be in full compliance with other filing and payment requirements;
  5. You must have made three consecutive direct debit payments;
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien; and
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement.

An existing installment agreement not structured as a Direct Debit Installment Agreement can be converted so that you can now qualify for this relief for lien withdrawal. Bear in mind that if you default on your Direct Debit Installment Agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

Don’t Let The IRS Strike You Out And You Lose Everything You Have Worked For!

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Whether They Are Old Taxes Or New Taxes, The IRS Is Still Looking To Collect From Sharpton.

The Rev. Al Sharpton lately has come into prominence as an imposing figure as men in power lined up to exclaim their admiration for him. Mayor Bill de Blasio and Gov. Andrew M. Cuomo hailed him as a civil rights icon. President Obama sent an aide to read a message commending Mr. Sharpton’s “dedication to the righteous cause of perfecting our union”.

But despite this rise in power Mr. Sharpton has apparently sidestepped the inevitable obligations to pay taxes as public records show more than $4.5 million in current state and federal tax liens against him and his for-profit businesses.

During a news conference at the headquarters of his National Action Network in Harlem, in November 2014, Mr. Sharpton sought to refute the assertion by an article in the New York Times that there were $4.5 million in state and federal tax liens outstanding against him and the for-profit businesses he controls. He said that the liens had been paid down, although he declined to say by how much, and that he was “current on all taxes” he was obligated to pay under settlement agreements with tax authorities.

We’re talking about old taxes,” he said, adding: “We’re not talking about anything new. So all of this, as if I’m not paying taxes while I’m doing whatever I’m doing, it reads all right, but it just is not true.”

State and federal tax records show, however, that the liens against Mr. Sharpton and his businesses remain active, meaning they have not been completely paid off. But that could change soon, thanks to the more than $1 million raised at his birthday party last month.

When would the IRS or State Tax Agency file a Tax Lien?

The IRS or a State Tax Agency will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount. For IRS under the IRS’s Fresh Start program, the lien threshold was increased from $5,000 to $10,000.

The Notice of Federal or State Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Alternatively, a new lender should be willing to make the new loan where the IRS and State Tax Agency agrees to subordinate its lien. A taxpayer can request that the IRS and State Tax Agency subordinate their liens to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS and State Tax Agency agree to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property.

Federal Tax Liens Do not Necessarily Have To Remain In Place While You Are Under A Payment Plan.

It is true that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full. You must enter into a Direct Debit installment agreement and also meet the following to request that the Federal Tax Lien be withdrawn:

  1. The current amount you owe must be $50,000 or less;
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible;
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier;
  4. You must be in full compliance with other filing and payment requirements;
  5. You must have made three consecutive direct debit payments;
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien; and
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement.

An existing installment agreement not structured as a Direct Debit Installment Agreement can be converted so that you can now qualify for this relief for lien withdrawal. Bear in mind that if you default on your Direct Debit Installment Agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Creed’s Singer Scott Stapp Alleges IRS Error Left Him Penniless & Homeless

In the late 90s and early 2000s, Scott Stapp and his band, Creed, topped charts with songs like “Higher” and “With Arms Wide Open.” The band sold more than 50 million albums worldwide, making frontman Stapp a millionaire who at the height of his popularity had an estimated net worth between $10 and $30 million.

What a difference a few years can make.

Recently, Stapp shocked fans by posting a 15-minute video to his Facebook page, claiming that he’s now broke and homeless.

In the odd clip, shot in black and white, Stapp addressed his fans directly; assuring fans that he is drug-free and sober. However, recent papers filed in a divorce proceeding by Stapp’s estranged wife, Jaclyn Stapp, tell a different story: in the divorce petition, Jaclyn Stapp claimed that Stapp had recently been taking a number of drugs, including amphetamines, crystal meth and steroids.

Stapp is no stranger to addiction, having admitted to abuse of alcohol and prescription drugs in the past, but insists that his current problems have nothing to do with drugs or alcohol. Instead, he says in the video, during “an audit of my record and my personal finances… a lot of things were uncovered.” Stapp goes on to claim that “a lot of money was stolen from me” and “all hell broke loose.”

Included in Stapp’s litany of accusations is his claim that Internal Revenue Service (IRS) has frozen his bank accounts on a number of occasions. Stapp says that the accounts were frozen “all of the sudden” – although it’s important to understand that the IRS doesn’t freeze your bank account or take your money without proper notice. The seizure is referred to as a levy and it’s rarely a surprise when it happens.

For the IRS properly levy you, the IRS must first issue an assessment, explaining that tax is owed. Next, the IRS sends a Notice and Demand for Payment. If you don’t respond to that Notice, the IRS then sends a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (“Final Notice”) at least 30 days before the levy. It is the non-response to the Final Notice (which is sent by certified mail) that now gives the IRS the green light to start levy action.

Levies can be placed on tax refunds, wages, bank account or other property. If the levy causes a hardship, you can ask that it be lifted – although any tax obligation would remain in place.

Stapp says, however, that when he called the IRS to find out what happened to the money, he was told, “Oh we had an address mix-up, it was a clerical error, so we’ll return your funds in 9-10 months.” That seems unlikely but Stapp maintains that is what happened. He goes on to say, in the video, “I don’t understand how that’s fair in America, in the country that we live in.”

When a bank levy is issued, the IRS allows up to 21 days before the frozen funds must be released by the bank to the IRS. The purpose of allowing this amount of time is to allow a taxpayer to show to the IRS the hardship such a seizure would cause or raise other defenses such as the levy was somehow wrongful. If the IRS agrees, the funds would be promptly unfrozen – not take 9 to 10 months as Stapp so claims he was told.

Stapp also claims that his banks accounts have been hacked and someone has changed his online passwords and transferred all of the money out of his bank accounts.

A bank levy by IRS attaches to whatever funds are in your account on the date of the levy notice. If you have outstanding checks which have not yet cleared the bank, those checks would now not be honored by the bank as the account is now frozen; however, any funds deposited after the date of the levy notice would not be subject to the freeze. If there was nothing in Stapp’s bank accounts when the levy was issued, there would be nothing for the bank to freeze for the IRS.

Stapp says, “Between IRS attacking me… between the banks basically saying ‘yeah, all of your money has been taken out of your accounts’,” he has no money. He has, he says, been living in the Holiday Inn and has been forced to sleep in his truck. He has no money for food and as a result, ended up in the emergency room.

Stapp says he is looking for an attorney and plans to fight those who are persecuting (his word) him. Remarking on his alleged tax issues, he says that it’s not fair that he has been “targeted by IRS because of a clerical error.” Stapp we are available to help you.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Why You Don’t Mess With California – A Primer On California Tax Collection Actions.

California is unique in the structure of its tax system. Most States operate under a single tax agency. The Federal government uses a single tax agency called the IRS. But California has three tax agencies! They are the Franchise Tax Board (“FTB”), Board Of Equalization (“BOE”) and the Employment Development Department (“EDD”).

What does FTB cover?

The FTB administers the income tax. This tax applies not only to individuals, but also to sole proprietorships, partnerships, estates, and trusts. In addition, the income “passed through” to individuals by Subchapter S corporations and certain other entities is subject to State Personal Income Taxation. The tax is applied to all sources of income unless specifically excluded, including wages and salaries, interest, dividends, business-related income, and capital gains.

What does BOE cover?

The BOE administers the Sales and Use Tax. The tax in a specific California location has three parts: the state tax rate, the local tax rate and any district tax rate that may be in effect. Sales and Use Tax is the second largest source of tax revenue in California and is assessed at both the state and local levels.

What does EDD cover?

EDD involves payroll taxes which includes all employer paid taxes, State Income Tax Withholding of employees, State Disability Insurance (“SDI”) Taxes and Unemployment Insurance (“UI”) Taxes.

The California Tax Agencies can go way beyond liens and levies to enforce collection and put pressure on taxpayers.

The FTB publishes Top 500 Delinquent Taxpayers (one list for personal and one for corporate). The FTB is required by law to post this information at least twice annually. California Revenue & Taxation Code § 19195.

  • The FTB will notify each taxpayer by certified mail 30 days before they post their information.
  • As cases are resolved, those taxpayers are removed from the list, reducing the total number of listings from the original 500.
  • Your occupational and professional licenses, Including your driver license may be suspended under Business and Professions Code §494.5.
  • State agencies will not enter into contracts for the acquisition of goods and services with you under Public Contract Code §10295.4.

The BOE will revoke your seller’s permit. If your seller’s permit is revoked, you cannot sell your goods. Also, as a corporate director, officer, member, manager, or other person having control or supervision of the filing of returns or payments of taxes, you may become personally liable for any unpaid sales and use taxes, interest, and penalties. Such personal liability for any unpaid taxes and interest and penalties on those taxes is triggered upon termination, dissolution, or abandonment of a corporate business or limited liability company, any officer, member, manager, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation or limited liability company in complying with any requirement of this part. Section 6829 of the Revenue and Taxation Code.

The IRS has the Trust Fund Recovery Penalty (also known as the 100-percent penalty). The EDD has something similar referred to as “CUIC 1735”. But CUIC goes way beyond the IRS’ version. Not only does the EDD assert a full 100-percent exposure of the employees tax withholdings AND the employer’s share of payroll taxes to targeted responsible individuals but also a 10% nonabatable assessment penalty (it should be noted that the IRS version is limited only to the employee’s share of FICA and withheld federal income taxes, roughly 60% of the corporate employer’s overall liability). The two key elements of CUIC 1735 are responsibility and willfulness. The EDD must have both elements before they can make the 100% assessment stick. Any officer, major stockholder, or other person in charge of the affairs of the business can be held responsible. Before the assessment can become final, the targeted responsible person must be given notice, an opportunity for an administrative hearing, and an appeal. If the targeted individual loses his or her administrative hearing and appeal, and does not pay within 10 days after assessment, her or she will be penalized a further 10% pursuant to CUIC 1135.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. Federal and State Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS and State tax problems to allow you to have a fresh start.

What You Need To Know About Levies By The IRS.

A Federal Tax Lien just makes sure the IRS eventually gets paid. A levy means now the IRS gets paid.

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.

If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in.

For instance,

  • The IRS could seize and sell property that you hold (such as your car, boat, or house), or
  • The IRS could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).

What due process must IRS follow before they can levy?

The IRS will levy only after these three requirements are met:

  • The IRS assessed the tax and sent you a Notice and Demand for Payment;
  • You neglected or refused to pay the tax; and
  • The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.

The Final Notice of Intent to Levy and Notice of Your Right to A Hearing is your last warning before the IRS starts levy action. You do not want to ignore this notice.

Difference between a bank levy and a wage levy.

If the IRS levies your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.

If the IRS levies your wages, salary, federal payments or state refunds, the levy will end when:

  • The levy is released,
  • You pay your tax debt, or
  • The time expires for legally collecting the tax.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.