If you have financial problems, tax debt is a double whammy. Difficulty in paying that debt is one problem. But things could get even worse if the IRS were to garnish your wages or levy against your bank account.
There are many different actions the federal government can take against a person in relation to a tax debt. Sometimes, having back-due taxes leads to a person facing having a federal tax lien issued against their property by the federal government.
Homeowners with underwater loans face the possibility of a large tax bill if they obtain a principal reduction through a deal with their lender, a foreclosure or a short sale in 2014. Congress recently returned from its summer vacation and now many wonder whether legislators will pass relief for struggling homeowners.
A recent case details what can happen when a bank does not immediately apply an Internal Revenue Service levy to freeze a bank account. The bank was on the hook for the amount that its customer withdrew.
When you do not have the money to pay your tax bill before the filing deadline, you may not file a return. Requesting an extension usually does not avoid the failure to pay penalty.
The chief information officer for the Massachusetts State Legislature and his wife allegedly owe nearly $150,000 in back taxes, according to the Internal Revenue Service. The man's earnings from the state over the last three years totaled more than $1.1 million and he likely had additional income from his information technology consulting company. The IRS filed liens last year for the taxes owed for the 2010 and 2011 tax years. It is not known whether these taxes are owed on earnings from the state or from business profit.
The historic Essex House in Holyoke is facing foreclosure as its current and former owners are delinquent in paying a substantial amount of taxes. A tax lien was previously placed on the property to no avail. The property is also in a deteriorating state, causing many city officials to be concerned about its unclear future and contemplating methods that would establish a long-term plan for the building. The property currently has an outstanding tax bill of more than $76,780, stemming from taxes that accrued between 2008 and 2013. A tax collector filed a tax taking for the property in 2011 when over $7,000 was due in unpaid taxes. The property was then eligible for a foreclosure by the city during the same time period, but many properties were also subject to foreclosure at the time, so action was delayed on the Essex House. Finally, the property was officially approved for foreclosure in September 2012 with a complaint to foreclose the lien in November 2012.
Changes in the law regarding tax liens are coming to the Boston, Massachusetts, area. Landlords in downtown Boston's Business Improvement District used to have a choice if they wanted to pay a voluntary tax that was based on their real estate assessment or if they preferred not to pay it. However, new changes now require landlords to pay this tax. Additionally, the tax will now be charged on a retroactive basis. Landlords who chose not to pay into the BID program will now have to pay the tax or face stiff consequences in the form of a tax lien being placed on their property in 2015. The relevant area that applies to the tax lien situation includes an area of 34 blocks in the Downtown Crossing and adjacent areas. It also includes areas of the Theatre District and the Financial District. There are currently 308 property owners.
Citizens in the city of Fall River, Massachusetts, got something a little different in their property tax bill last month. Along with a statement for their quarterly property tax bill, they also received an affidavit that they had to sign and return to the state department of revenue confirming their address and ownership of the property.
A new study by the National Consumer Law Center said outdated state and local municipality laws are making it possible for people who are delinquent on their property taxes to lose their homes. For as little as $400 owed in property taxes, local governments are placing tax liens on the houses, seizing the property, then selling the tax liens to big banks and other investors.