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Can I sell or refinance my house and/or assets with an IRS tax lien filed against it?  YESSS!!!!!

First, a tax lien is a lien against the taxpayers physical and financial assets. It is like a blanket, it covers everything, not just one thing. It is not meant to prevent the sale/refinancing of assets. It is made to protect the interests of the government.

So, in many cases the IRS will subordinate its lien, meaning it will let another creditor, in most cases a bank, take a higher priority than the government, if it is in the best interest of the government. For example, you would refinance your house and take out equity to pay the IRS or you want to sell your house and any cash going to the seller would go to the IRS.

If you have under $25,000 in tax debt, including penalties and interests and have made at least 3 direct debit payments, you may also request that the IRS withdraw the lien. This makes refinancing and/or selling your assets much easier. But, if a new tax debt is incurred, a new lien will appear so it is not uncommon that some taxpayers will have multiple tax liens filed against them. Once the tax debt has been paid the tax liens are self-releasing, meaning they will automatically release and nothing further needs to be done.

In some cases, but depending on the bank, if you have a payment agreement in place with the IRS, the bank may not require a subordination of the lien and you may be able to refinance and/or sell the house/asset. Once again, this is all depending on the individual bank.

So, just because you have a tax lien against you, it doesn’t mean you can’t refinance and/or sell your house. It just depends on the circumstances.

Also, in October, I will be giving a short seminar titled “I owe the IRS, now what?” at Assabet Valley Technical High School in Marlborough, MA. Sign up has already started.

 

Also, look for my Face Book post with a downloadable PDF on “21 Ways to Get Help for Your IRS Tax Problem and Get Your IRS Debt Resolved, Reduced, or Forgiven.”

Ancient taxes from around the world

• During the Middle Ages, European governments placed a tax on soap. It remained in effect for a very long time. Oliver Cromwell placed a tax on Royalists, who were his political opponents, taking one tenth of their property. He then used that money to fund his activities that were aimed against the Royalists. Great Britain didn’t release the tax on soap until 1835
• In 1885, Canada created a Chinese Head Tax under the Chinese immigration Act, which taxed the entry of Chinese immigrants into Canada. It was meant to discourage Chinese people from entering Canada after the completion of the Canadian Pacific Railway. The tax lasted until 1923 when a law was passed banning Chinese people from entering Canada altogether with a few exceptions. In 1947, the immigration act was repealed.

Now that you have filed your tax returns and have discovered that you owe the IRS, how do they collect the money? First the IRS will send you a bill with the tax owed based on your return and with any applicable penalties and interest. If you don’t pay the first bill, the IRS will send you a second bill.  If you agree with the amount there are several ways to pay: mail in a check with your voucher. These days, this is my least recommended way to pay because of the IRS mail back log. You can visit www.irs/gov/payments to consider online payment options. You can also create your own online account with the IRS and pay that way. This online portal can also allow you to see you past year tax returns and make estimated payments as well. Another way to pay is to set it up with us (if I am your tax preparer) or your current tax preparer to do direct debit of the tax owed when they submit your tax return. So, if you still do not pay after they send you your final bill, the IRS will start with collection action. The IRS has 10 years from the tax assessment date to collect the tax owed. That is a long time for you to be on the IRS’s radar. 

Here are some of the collection terms that are used within the IRS: 

Federal Tax Lien: A legal claim against all your current and future property. This lien automatically comes into existence when you don’t pay the tax on time after the first bill.

Notice of Federal Tax Lien: This is when the IRS sends out a notice to all creditors notifying them that you own the IRS. 

Notice of Intent to Levy: They send you a notice with the intent to Levy. If you don’t pay by the time given on this notice, they will start the Levy process.

Levy: They take the money from your bank accounts. This is a legal seizure of property and rights to property. They can also seize your assets and sell them. 

Seizure: Same as a levy

Next month, I’ll explain some of the types of notices. 

Also, look for my Facebook post with a downloadable PDF on “21 Ways to Get Help for Your IRS Tax Problem and Get Your IRS Debt Resolved, Reduced, or Forgiven.”

Ancient taxes from around the world

In 1705, Russian Emperor Peter the great placed a tax on beards, hoping to force men to adopt the clean-shaven look that was common in Western Europe. 

The French had a salt tax called the gabelle, which angered many and was one of the contributing factors to the French Revolution. It was adopted in the 14th century and had many revisions, lapses and reinstatements and finally abolished in 1946!!

In my previous blog, I talked about taxpayers who haven’t filed in a several years. Now you are ready to file only to find out that you have misplaced some of those tax documents, you can’t remember when the last time you filed last, or maybe you can’t locate the previous tax returns that you did file! Well, there is a solution to all that and more. Transcripts!!

I can log into the IRS databases, with a signed power of attorney and pull all that information for you. I can see what the IRS see’s and along with all the tax documents that were filed, when you filed last, any penalties and interest, refunds, taxes owed, assessments, upcoming audits and much, much more.

With these transcripts, I can help recreate the tax returns that need to be filed, see if you could qualify for penalty abatement and see what the best course of action will be going forward.

Upcoming Due Dates:

June 15th

• Second quarter estimated tax payment due.

Sept 15th

• Partnerships and S-Corps that were put on extension are now due.
• Third quarter estimated tax payment is due.

Oct 1st

• Estates/trusts that filed an extension are due.

Oct 15th

• Individual tax returns (Form 1040) are due for taxpayers who filed an extension.
• C-Corporation tax return is due for C-Corporations that filed an extension.

Ancient taxes from around the world

In Ancient Rome, it was not uncommon for slave owners to free their slaves after a certain number of years of work and/or the payment of a certain fee. Slaves could pay that fee because they had the opportunity to work in several places, and thus could earn the money used to obtain their freedom. The Roman government required the newly free slave to pay a tax on his/her freedom.

Something to ponder: If you are subjugated and separated from you family, forced to work, and possibly physically harmed (beaten/whipped), would you want to pay a tax??

I don’t have to file a tax return this year!  Sweet!!

My tax preparer said I don’t need to file a tax return this year, so why should I?  Some people don’t need to file because their income is lower than their standard deduction, but here are a few reasons why you should file for the current year.

1. Federal Income Tax Withheld: You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
2. Earned Income Tax Credit: You may qualify for EITC if you worked but did not earn a lot of money. EITC is a refundable tax credit, which means you could qualify for a tax refund. To get the credit, you must file a return and claim it.
3. Additional Child Tax Credit: This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
4. American Opportunity Credit: Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent (40%) of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.
5. Adoption Credit: You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.
6. Stimulus payment/ Economic Stimulus Payment (EIP): If you didn’t receive any or some of the 3 stimulus payments in 2020 and 2021, your maybe eligible if you file a tax return and you will get the stimulus money as a nontaxable tax refund.

Upcoming Due Dates:

June 15th

• Second quarter estimated tax payment due.

Sept 15th

• Partnerships and S-Corps that were put on extension are now due.
• Third quarter estimated tax payment is due.

Oct 1st

• Estates/trusts that filed an extension are due.

Oct 15th

• Individual tax returns (Form 1040) are due for taxpayers who filed an extension.
• C-Corporation tax return is due for C-Corporations that filed an extension.

Ancient taxes from around the world

Pecunia non olet is a Latin saying for “Money Doesn’t Stink!”. During the 1^st Century AD, Roman Emperor Vespasian placed a tax on urine!! The buyer of the urine paid the tax. The urine from the public urinals was sold as an essential ingredient for several chemical processes. It was used in leather tanning, wool production and by launderers as a source of ammonia to clean and whiten woolen togas.

I have a question for you! Who has not filed their taxes in a few years?

If you are thinking “ME!”, keep reading, because here are some reasons to file:

• If you need a bank loan, the bank will want to see previous year’s tax returns.
• If you have a refund due, you only have so much time to claim it on your tax return.
• You face steep penalties for not filing, up to 25% of what is owed!!
• It causes unwanted stress in your life.
• The IRS is using more technology than ever to track down taxpayers who have not filed taxes.

What do I do? Well, call me and I can file the unfiled tax returns. Some of the things we will look at are how many years need to be filed, filing married or separately, do state returns need to be filed and what happens after we file the returns.

Upcoming Important Due Dates:

June 15th

• Second quarter estimated tax payment due.

Sept 15th

• Partnerships and S-Corps that were put on extension are now due.
• Third quarter estimated tax payment is due.

Oct 1st

• Estates/trusts that filed an extension are due.

Oct 15th

• Individual tax returns (Form 1040) are due for taxpayers who filed an extension.

Hi Everyone,

Here is my first blog post with many more to come.

Did you know that there are more than 10 million taxpayers who have not filed their previous year’s tax returns in over a year?! That is right, some taxpayers have not filed their 2019 tax returns and previous years before that. We in the tax industry call them “non-filers”. The IRS is now using Artificial intelligence (AI) to find these “non-filers” and have them file the missing returns from prior years.

Why would you care about filing on time when you have a refund? Because you have the later of 3 years from the due date of the tax return to file and get your refund or you have 2 years from the date the tax was paid. If you wait past these dates, you lose your refund to the IRS.

If you have not filed in a few years, I can help you file all the past year tax returns and if you don’t have all your original tax documentation, I have ways to get copies of the tax forms.

Upcoming Due Dates:
03/15/21 – Last day for S-Corps, partnerships, multi member LLC’s to file business tax return.
04/15/21 – Last day to file C-Corp tax return or file for a 6-month extension.
04/15/21 – First quarter estimated taxes for 2021 due.
04/15/21 – Calendar year estate/trust tax returns due (15th day of fourth month for fiscal year).
05/17/21 – NEW DATE -Individual tax returns due and last day to file for a 6-month extension.
06/15/21 – Second quarter estimated tax payment due.