The IRS is one of the most brutal collection agencies on the planet with the authority to aggressively “collect” overdue tax debts by seizing bank accounts and assets. This collection tactic is typically the result of a lack of communication between taxpayer and the IRS – just ask Lindsay Lohan who, as of yesterday, is experiencing her own IRS seizure nightmare.
According to TMZ.com, the IRS was tired of waiting for the 26 year old actress to settle her massive IRS debt and seized ALL of Ms. Lohan’s bank accounts. Back in February, the IRS filed tax liens against her for tax years 2009 and 2010 claiming she owed $233,904 in unpaid federal taxes.
In a blog post last week I reported that actor and friend Charlie Sheen made a gallant attempt at tax relief by writing the actress a check for $100k to help her 2009 IRS tax problem. However, it appears this generous gift was merely a drop in the bucket due to the additional taxes she owes for 2011.
TMZ reports Lohan “is in full-on panic mode about her financial situation”, and “desperately trying to make some cash to get out of the red.” It’s too bad Ms. Lohan’s expert team of IRS tax attorneys and advisors couldn’t resolve this back tax issue after the tax liens were filed in February. But even if they did, the IRS holds taxpayers personally responsible for their own taxes and will go after tax cheats in spite of celebrity status if they fail to pay. The IRS does not roll out the red carpet for anyone, let alone a non-compliant celebrity.
I mention Ms. Lohan’s story as a “worst case scenario” involving IRS tax liens and levies and to caution taxpayers that it’s best to prevent them in the first place. Here are some important points to know:
- An IRS levy is the actual seizure action taken by the IRS to collect back taxes, generally resulting from bad communication between the IRS and the taxpayer. The IRS has the legal ability to levy taxpayer wages or accounts receivable and all other sources of income. Tax levies are to be avoided at all costs.
IRS Bank Levies
- When bank account is levied by the IRS, referred to as “one shot” levies it is only for the day the levy is received by the bank.
- In that day, the bank is required to 1) remove the amount available in the account to satisfy the levy, 2) send the funds to the IRS within 21 days unless otherwise instructed by the IRS.
- This type of levy does not affect future deposits into the bank account unless the IRS issues another Bank Account Levy which they will do if there is a remaining amount to be collected.
The good news is that IRS tax liens and levies are preventable! If you’ve been threatened with the following:
- IRS bank levy
- Tax lien
- IRS Seizure
- Denial or termination of an installment agreement
Don’t ignore an IRS collection notice, unless you want an empty bank account. Instead, hire an expert IRS tax attorney or certified tax resolution specialists to file an IRS Collection Appeal to stop an IRS levy or seizure process and help you resolve your IRS problems once and for all. But you must act quickly to resolve this matter if you ever hope to own anything again.
TMZ: Lindsay Lohan-IRS Seizes Bank Accounts http://www.tmz.com/2012/12/03/lindsay-lohan-irs-bank-accounts-taxes/
Tax Resolution University post: http://www.taxresolution.com/blog/140k-tax-lien-for-lindsay-lohan/
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