IRS & State Tax News, Updates, Opinion, Guidance, and More» Tax Lien

Actress Lindsay Lohan Hit with $90K IRS Tax Lien

Kellie Marks — Thu, 12 Jan 2012 02:14:17 +0000

As if Lindsay Lohan hasn’t had enough negative publicity lately, she has now been hit with an IRS tax lien. According to official documents filed in Los Angeles County, the actress failed to pay $93,701.57 in federal income taxes back in 2009.

Sources for Lohan told TMZ that the 25-year-old had no knowledge of her outstanding tax bill, as she assumed that her finances were being handled by her accountants.

Those sources also explained that the unpaid taxes may have been a result of the Mean Girls star’s recent overhaul of her business team, and made assurances that the issue would be resolved immediately.

If Lindsay doesn’t settle her hefty back tax bill, however, the federal government can file a tax levy against her as part of it’s standard collection process. For Lohan, this could mean asset seizure – whereby the IRS can take her property, including homes, cars or jewelry – or the more likely scenario of having a bank levy placed on her bank accounts.

Although 2009 was not a particularly lucrative year for the actress, paying off her delinquent taxes should not be an issue since she recently received almost $1 million to pose for Playboy.

According to E! News, she is also in talks to star as Elizabeth Taylor in a Lifetime movie, Elizabeth & Richard: A Love Story.

Lindsay, who first gained fame as a child star and had leading roles in such films as Freaky Friday and Herbie: Fully Loaded, is no stranger to notoriety and legal struggles. Since 2007, she has had two DUIs and three stints in rehab. Subsequently, she was rumored to have been passed over for movie roles when she was deemed uninsurable by producers. Additionally, on Tuesday – the same day that TMZ first reported the tax lien filed against Lohan – a paparazzo filed suit against the actress, alleging that she was in a car that he claims struck him last January in Hollywood.

It also appears that tax troubles may run in the Lohan family; Lindsay’s father, Michael Lohan, made our list of the top 100 celebrities with tax problems in 2010.

Another Rapper in the IRS Doghouse? Bow Wow Hit With Tax Lien

Kellie Marks — Tue, 29 Nov 2011 16:14:55 +0000

The IRS has reportedly filed a tax lien against rapper Bow Wow in the state of Florida.

According to TMZ, the 24-year-old, whose real name is Shad Gregory Moss, owes $91,105.61 in unpaid taxes from 2006.

Bow Wow, who has been criticized lately for pushing back the release of his upcoming album, Underrated, claims that the tax lien story is untrue, posting on his blog that “TMZ saying they are about to runa story on me thats once again “Not True” as im sitting in my beautiful condo as of RIGHT NOW that they said i dont have anymore.”

It’s possible that the rapper doesn’t quite understand what a tax lien is. A tax lien is the government’s claim to a delinquent taxpayer’s assets – not the actual seizure of assets to satisfy owed taxes. Since no actual collection actions are being taken and he’s still residing in his condo, Bow Wow may not even realize that the IRS has filed this lien against him.

Bow Wow joins a long list of rappers who’ve faced tax-related controversy in recent years, including Ja Rule, Snoop Dogg, Young Buck, Method Man, Swizz Beatz, Fat Joe, Trick Daddy, Obie Trice, Lil Wayne, Chamillionaire, DMX, Nas, Beanie Sigel and Doug E Fresh.

Regardless of whether or not the tax lien against Bow Wow exists, we sure hope that he has a qualified tax professional on his side to help him sort things out.

Kelly Monaco the Latest Tax-Troubled DWTS Alumn

Manny Davis — Thu, 22 Sep 2011 19:07:38 +0000

It’s becoming a question of whether celebs go on the hit ABC show Dancing with the Stars because they are struggling financially, or if the stars’ tax woes arise as part of some sort of DWTS curse.

According to The Detroit News, Kelly Monaco is the latest Dancing with the Stars alumn to have a tax problem made public, as the IRS filed a lien with the LA County Recorder of Deeds earlier this month against the Playboy model for failing to pay $67,817 in federal taxes.

The General Hospital actress, who was the very first champion of DWTS, joins the growing list of former Dancing with the Stars contestants who’ve had IRS run-ins, including Kelly Osbourne, Macy Gray, Toni Braxton, Lil Kim, Chynna Phillips (of Wilson Phillips), Shannen Doherty, Jodie Sweetin, Aaron Carter and Debi Mazar.

Hopefully, the 35-year-old Monaco will be able to pay her back taxes with the profit that she makes from her new E! reality show, Dirty Soap, which premiers this Sunday.

IRS Eases Up On Taxpayers Who Owe Taxes or Back Taxes

Manny Davis — Fri, 04 Mar 2011 12:00:07 +0000

Last Thursday, IRS commissioner Doug Shulman announced a new set of initiatives to help taxpayers struggling to pay their taxes or pay off back taxes in this lackluster economy. Sometimes IRS enforcement actions (e.g. tax lien) can bury the taxpayer further which lessens not only their ability to climb out of the hole they are in, but the probability the taxpayer will come into compliance. In other words, sometimes enforcement actions by the IRS decrease the taxpayer’s ability to pay, making it less likely the IRS would collect the tax revenue owed to it. For example, with tax liens, the National Taxpayer Advocate report last month stated how tax liens can be counterproductive in helping taxpayers come into compliance with the IRS as they can worsen a taxpayer’s financial situation.

The IRS set new policies that intend to help those with back taxes or tax debt. Here is a review of these policy changes:

Tax Lien Changes

The IRS announced a few major policy changes in regards to tax liens.

The IRS will increase the tax debt threshold in which tax liens are generally issued from $5k to $10k. This can help those having trouble paying taxes at lower amounts prevent their financial situation from deteriorating so that they can get back on their feet or into compliance. As a result, less tax liens will be filed. The IRS will revisit lien threshold changes next year to see the effects of this specific policy change.
The IRS will also make it easier to obtain tax lien withdrawals. This means once a taxpayer has come into compliance (e.g. paid off the tax debts and or setup acceptable arrangements with the IRS such as an IRS Installment Agreement), the IRS will make it easier to get the lien expunged from a taxpayer’s record. Normally, even when back taxes are paid, a person’s record or credit report will show the lien as being “released,” which still does harm to the taxpayer. Now the IRS, once the taxpayer requests it, will get the lien completely withdrawn from public records.
The IRS will make it easier for taxpayers owing $25k or less, to get a tax lien withdrawn through direct debit installment agreement arrangement. The IRS has stated that taxpayers who enter into a Installment Agreement via direct debit (DDIA), or if taxpayers in a normal installment agreement already move to Direct Debit Installment Agreement (DDIA), the IRS will withdraw a tax lien. If a taxpayer already has a DDIA, then they will need to make an IRS request to have the lien withdrawn.

The financial benefits taxpayers with these tax lien changes is that less tax liens will be filed, and many other existing tax liens will be withdrawn. This will most likely allow taxpayers to get back on their feet or prevent credit deterioration as a smeared credit report with a tax lien can hurt Americans in terms of obtaining a job, mortgage, car loan, or even renting a home. This is turn should help taxpayers get into compliance and help the IRS increase their Collection Potential for taxpayers that owe. Moreover, DDIAs have a lower user fee and the normally result in higher compliance rates with taxpayers making automatic monthly tax payments.

Offer in Compromise Changes

The IRS is expanding a new streamlined Offer In Compromise (OIC) program – With the economy taking a toll on taxpayers, the IRS intends to make it easier for taxpayers to obtain an OIC by allowing taxpayers who owe $50,000 or less and who make up to $100k to qualify for an OIC (previously was $25,000 or less). The IRS look at a taxpayers financial situation to make sure they cannot pay the tax liabilities over time or in one payment before the taxpayer can settle for less.

The financial benefits here again just like the other policy changes across IAs and tax liens it that many more taxpayers who are facing financial difficulties will be able to settle for less than they owe as long as their financial situation qualifies. This in turn should lead to more OICs being accepted and the IRS collecting tax revenue that most likely would not have been collected through normal enforcement actions.

Installment Agreement Changes

The IRS will provide incentives for taxpayers who convert and existing non-direct debt Installment Agreemnet or setup a DDIA. This is bit of redundant as it is discussed above, but the benefits here now with an Installment Agreement is that a tax lien can be negated if the taxpayer elects to have the monthly tax payment deducted directly from their bank checking account. This will also increase compliance for many more taxpayers preventing defaults or missed payments.
The IRS is making it easier for small businesses to obtain Streamlined Installment Agreements. A Streamlined Installment Agreement does not require a collection information statement (form 433-B for businesses), that is why they are “streamlined.” Now that a small company is not required to verify of assets, liabilities, and revenues, if they owe between $10,000 and $25,000 (previously small business had to owe $10,000 or less). However, small businesses in order to qualify will need to setup the Streamlined Installment Agreement as direct debit and be willing to pay back tax liabilities over 24 months.

The financial benefits again are that individual taxpayers can avoid tax liens or have tax liens expunged if they setup a direct debt installment agreement. This will help taxpayers regain financial strength by preventing their credit reports from being negatively impacted. Moreover, small businesses can qualify for Streamlined Installment Agreements, and both businesses and individuals will benefit from DDIAs lower user fees. However, the IRS will need to see a period of compliance with direct debit before tax liens will be withdrawn.

Overall, it seems that the IRS has listened, especially to the National Taxpayer Advocate report that was released last month. These changes will benefit the taxpayer, the IRS and the Federal government revenues overall. It will be a win win situation for all parties involved most likely.

Janice Dickinson Deals with a New Agency: The IRS

Manny Davis — Thu, 11 Nov 2010 21:53:13 +0000

Janice Dickinson, one of America’s most famed and fortunate supermodels of the 70′s, has recently been recognized by a “different” type of paparazzi…The IRS, that is.

With recent years spent bouncing around television shows like America’s Next Top Model, I’m A Celebrity, Get me Out of Here! and even her own reality show, The Janice Dickinson Modeling Agency, Dickinson’s supermodel status has clearly brought her far. But let’s just say this 55-year-old’s glory days are over.

Not only is Dickinson scheduled to appear as a patient on next season’s Celebrity Rehab with Dr. Drew, but the government is after her, too. (Hey…that rhymed!)

Our soon-to-be TV “patient” has also been slammed by the IRS with a tax lien amounting to over $200,000, according to public records and The Detroit News.

And this isn’t the first of it; Dickinson actually received liens last February and last May, with amounts of $50,000 and $33,500, consecutively.

Looks like our ex-supermodel should have spent more time watching her wallet, rather than her weight. Hopefully Dr. Drew can knock some sense into her this season; if not, we’re pretty sure the IRS will.

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Have Tax Debt from 10 Years Ago? The IRS May Still Collect

Debra Dragon — Mon, 18 Oct 2010 14:27:40 +0000

There are several reasons why a person might owe the Internal Revenue Service. This may include a financial hardship that hinders your ability to pay tax liabilities or failure to file your yearly tax returns. Regardless of the cause, when you find yourself on the receiving end of and IRS collection notice you have a major problem on your hands if you fail to take the appropriate actions.

Anyone who has been unfortunate enough to have experience with debt collectors can attest to the stress and anxiety that accompanies the collection process. Some consumers might even be familiar with the Statue of Limitations or amount of time allowed by law to collect a debt. Unfortunately the IRS is not the average debt collector nor do all the same rules apply to their collection efforts. While many debts may become “un”collectible after the set number of years have passed (per each states Statute of Limitations), the IRS can collect on unpaid taxes for up to ten years without special circumstances. If you owe back taxes from 10 years ago or longer, you might feel you are safe from the long arm of the IRS collection department. That would be an inaccurate assumption and one that could cost you dearly. Here are a few reasons why the Statue of Limitations for the IRS may go beyond the standard ten year rule.

Filing an Offer in Compromise (IRS tax settlement)
Filing for Bankruptcy
Taxpayer is out of the United States
Collection Due Process Hearing request
Taxpayer in litigation with the IRS
IRS sues taxpayer in Federal Court
Taxpayer signs a Waiver form (often required for Installment Agreements)

When certain conditions like those listed above are met, the IRS may extend the length of time allowed to legally collect on back taxes. For this reason it is important to fully understand your rights and obligations when it comes to money owed to the IRS. Other incentives to satisfy your tax liabilities include the following:

Levy- When the IRS decides to take aggressive collection actions, you may find yourself on the receiving end of an IRS levy. This occurs when the IRS places a federal lien on your bank account, basically freezing you out of your own bank accounts.
Lien- The IRS can also place a lien on your property and credit. This can lead to the seizure of assets that will then be sold in order to satisfy your debt to the IRS.
Wage garnishment- The IRS may decide to hit you where it hurts immediately, your paycheck. Your employer will be contacted and required to withhold a percentage of your paycheck (up to 80%) to be used to pay off your tax liability.

For the average person, any of these collection actions will result in an extreme financial hardship. Avoid finding yourself on the receiving end of IRS collection actions by taking the necessary steps to satisfy your tax liabilities. When it comes to the IRS and tax laws, most people will benefit greatly by consulting an IRS tax lawyer or tax professional to help guide them through the process.

Is Khloe Kardashian Dashing Her Tax Bill?

Manny Davis — Fri, 06 Aug 2010 15:00:41 +0000

Between her two reality TV shows, clothing store DASH, and LA Laker husband Lamar Odom, Khloe Kardashian has still somehow managed to score herself a tax lien. Last time I checked, reality TV, luxury retail, and basketball all pay pretty well, but apparently just not well enough. Either that, or Khloe is just another celebrity who thinks messing around with the IRS is no big deal.

Constantly in the limelight, Khloe has been spotted spending thousands on shopping trips down Ocean Drive, hosting outrageous late night parties, and wining and dining at the finest restaurants. There were even reports that her present to Lamar for the Lakers’ championship win was a $400,000 Rolls Royce, to which she claims against. Regardless, money has never appeared to ever be an issue for Mrs. Kardashian, or Mrs. Kardashian Odom, to be exact.

So what’s the problem? According to Access Hollywood, the State of California filed a tax lien against Khloe on July 28, 2010, for a total of just under $18.5 thousand dollars. The amount stems from unpaid back taxes and their consequential penalties and interest, which date back to 2007.

Apparently Khloe has paid the lien, or actually, paid the lien a long time ago, but her accountant never filed it. With a new accountant at her disposal, the lien has reportedly been paid off, and it’s only a matter of time before Khloe’s name gets cleared, or so she claims.

Chris Tucker Owes the IRS…Again

Manny Davis — Fri, 30 Jul 2010 19:36:25 +0000

Just about a year ago, we reported on funny guy Chris Tucker owing over $3 million in back taxes. You’d think that his reported $20 million ‘Rush Hour 2’ and $25 million Rush Hour 3 paychecks would have had him more than able to pay off the bill, but apparently his taxing situation has only gotten worse. Recent reports have appeared, and Tucker allegedly now owes over $11.5 million in back taxes to the IRS from years 2001, 2002, 2004, 2005 and 2006. Of course, the IRS has had enough, and clearly considers Tucker’s actions regarding his taxes to be far from funny. Filing a tax lien against him on July 27^th in L.A., these guys are not messing around.

What’s Tucker to do? I’m not sure how well stand up comedy gigs pay, and unless Tucker makes his way back into Hollywood soon, he could have a hard time getting the money back to the IRS. To his credit, he is reportedly attempting to sell his 9,000 square foot Florida estate to raise some quick funds. But, whatever the case may be, Tucker better act soon, or you can count on checking back one year from now for a third update, or maybe actually see him in jail, and this time for real.

Hold Up! 4 More Rappers Added to Our Back Tax List

Manny Davis — Tue, 27 Jul 2010 14:00:55 +0000

After our last post on infamous rappers known for more than one thing (to us – rapping; to the IRS – owing back taxes), we’ve discovered four more artists with recent tax issues.

If Method Man, Swizz Beatz and Fat Joe didn’t satisfy your oh-so-unfortunate-rappers-who-owe-money-to-the-IRS fix, then maybe these guys will. Lil Wayne, Chamillionaire, DMX and Nas – ever heard of ‘em? Well, it turns out that all four owe the IRS money – and a lot of it.

Lil Wayne - Perhaps Lil Wayne is really enjoying his time in prison? That’s our assumption at least, because this rapper is basically asking for more time in the slammer; this time, for failing to pay his taxes. Just last month, the IRS filed a $1.13 million, or as Wayne would put it, ‘a milli,’ tax lien against Lil Wayne for unpaid income taxes from years 2004, 2005 and 2007. And this isn’t his first encounter with the big boys, as Wayne previously had a lien filed against him in 2008, but managed to scrape up the $966,840 to pay it off. Let’s see if he can do it again…
Chamillionaire - Our boy Cham’s recent house foreclosure in Houston proves his inability to meet off mortgage payments. But, turns out that Chamillionaire has been struggling paying off taxes, too. Owing $184,000 in back taxes resulting from unpaid income taxes in 2007, Chamillionaire could be in over his head this time. If this rapper doesn’t clean up his act soon, he may actually have to change his name for more reasons than one.
DMX - Income tax, Income tax, Income tax- how many times do we have to say it until our rappers get a hint? Maybe we could make up a rap about it for them to understand better. Regardless, DMX is another one who owes over one million to the IRS in back taxes from failing to pay his income tax in 2002, 2003, and 2005. The money added up and the IRS, along with the State of New York, issued out more than one lien against him- culminating to over $1.5 million dollars.
Nas - So did we save the best for last? You decide. The numbers speak for themselves in Nas’ case, as he owes over $2.5 million dollars to the IRS. The money is a result of a tax lien filed against the rapper from unpaid federal taxes from 2006 and 2007. Now, not only does Nas have to worry about child support payments to ex-wife Kelis, but paying off his major tax bill, too.

So,that’s all for now, ladies and gentlemen. But, we aren’t making any promises that this is the last time we’ll be reporting on rappers with tax issues…

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3 Rap Artists Who Can’t Seem to Wrap Up Back Tax Issues

Manny Davis — Tue, 13 Jul 2010 14:00:28 +0000

Private jets, luxury suites, and the finest bottles of champagne – ‘necessities’ popular among America’s most loved and admired rappers may soon have to take on a lower priority. Why? The rappers have got to focus on paying off something a little more important first – their back taxes. With Method Man’s latest tax evasion scandal capturing headlines across the country, we’ve found that he may not be the only one with the issues. Just recently, famous performers Swizz Beatz and Fat Joe have also been struck by the IRS, proving that “money is a thing” after all. Let’s take a closer look.

Method Man - Or, more formally, Clifford Smith, has been all the talk this past week. What’s the big fuss? First off, he was arrested in October on felony charges, and accused of declining to pay $32,799 in personal income tax along with state income tax. Method Man pled guilty to the charges, and surrendered $106,000 in back taxes, penalties and interest over to the IRS. While the arrest could have guaranteed him four years in prison, our Man got off with a mere ‘conditional charge’- basically a spot in time out, with all charges cleared as long as he could stay out of trouble.
Swizz Beatz - Celebrated producer and acclaimed artist ‘Swizzy’ owes an even larger chunk of change to the IRS. Apparently, Beatz was recently served a $652,727 tax lien for unpaid federal taxes from 2008. What’s worse, this isn’t the first time. Swizz’s history shows a total of almost $2.2 million in back tax debt. I guess all of his ‘money in the bank’ could only last for so long…
Fat Joe - We should have known when his two million dollar Florida estate went on the market. Owing over $71,000 to cover the lost judgment against Florida Sun Trust, Fat Joe takes the third and final position on our list. And, it turns out that Florida may be the least of this rapper’s worries. Fat Joe reportedly owes back taxes amounting to $139,000 from previous liens such as the $105,000 claim from the state of New Jersey in 2008.

So will our rappers clean up their acts? My opinion: They should focus less on rapping about money and more on taking charge of it, and maybe, just maybe, they could have a lasting chance.