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Avoiding Tax Liabilities: So You Think You’re Smarter Than The IRS?

by: Anthony Parent   2010-08-10

If Nicholas Cage, Pamela Anderson and Wesley Snipes can get away without paying their income taxes, why should the IRS come after you? What people don’t understand is that all these celebs are far from getting away with their tax debts.

 

Cage is still very much on the hook for his $14 million tax debt; Pamela Anderson has a lien on her house and Wesley Snipes just lost his appeal of a three-year prison sentence. The IRS will go after anyone who owes back taxes. 

 

Trying to dodge a tax problem just doesn’t work, and it actually exacerbates the problem. For a while, it may even appear that you’re getting away with it. It could take years to make an enemy of the IRS. Years when you think you’re getting away with not paying them.

 

But once they are onto you, they have incredible powers to collect what you owe. Consider this; the IRS can lock the doors on a business and collect what is owed to them from the businesses customers, all without a court order. Insane!

 

A lot of peopel are unaware of just how far the IRS will go to collect from them. They think that the IRS can’t get to any of their assets; that they’ve bullet-proofed themselves against the IRS’ collection techniques.

 

Here are some of the most common myths about avoiding tax liabilities that we've heard:

 

Myth #1 – If it’s not in my name the IRS can’t get to it.

This is probably the most common myth people throw at us. They’ll share with us that their property can’t be seized by the IRS because they gave it to their kids, or put it in their wife’s name, transferred ownership to their parents or sold it to their brother for a dollar.

 

My favorite was the client who told me the IRS would never find his assets because he’d put it in his EX-wife’s name. The truth is the IRS is going to look at any of those transactions and see right through them --- and they don’t need a court’s permission to do so. They’ll ask ‘Is there a legitimate business purpose behind this transfer of assets or is this a sham?’

 

The IRS has tools that are very different from other creditors. They will use these tools to essentially ignore such transactions and see them for the real purpose. What you need to know is there is nothing to stop them from taking the first dollar you ever made. Why? Because the IRS had a claim to that dollar second you made it.

 

Myth #2 – I put my money into an LLC so it’s no longer a personal asset.

People think they can just put their money into an LLC and then pay their living expenses out of that company. The IRS will see right through that. They’ll say,’ You’re not treating that as a business. You’re using it as your piggybank.’ Then they’ll ignore the LLC and go after those assets.

 

Myth #3 – My money is overseas - the IRS has no claim on it.

The IRS has a claim on those dollars no matter where they are. They could be on Pluto. We’ll often see people trying to hide assets overseas with a relative or in a company that they set up out of the country. But the company’s paying all sorts of things for them. They use it to run up liabilities with impunity and expect the IRS to back off collecting because they are hidden across an ocean. The IRS has a global reach and they will use it. 

 

Myth #4 – I mortgaged my property to the hilt.

"My buddy has a million dollar mortgage against me. There’s no equity for the IRS to get." What people don’t seem to understand is that the IRS has unlimited powers to investigate someone who owes them money. If it’s a big enough case they’ll get a revenue officer to investigate.

 

Property law is incredibly complicated. People who think they understand it believe they can put obstacles in the way to make it look like there is not equity in the property. This does not work. The IRS has extensive powers to send out subpoenas and they are perfectly capable of saying ‘This mortgage is fraudulent and therefore doesn’t exist.’

 

If they decide that it wasn’t a bona fide transaction they can get a lien against that property. Then they will seize it and any other assets they can put their hands on. And they don’t even need a court order to seize your assets or your property. You can’t delay the IRS in state foreclosure court for years as you can with a private creditor. They padlock the property. If you enter it, you go to jail.

 

What’s the lesson here regarding avoiding tax liabilities?

The bottom line is this: if you have a big tax liability and you think you’re bullet-proof form collection, you are mistaken. You need to confront your problem and work with a professional to present a solution to the IRS. You do not want them to dig too deeply into your life to collect.

 

Also, get into compliance starting today. The IRS looks at you very differently if you’re current on your taxes. If you continue to run up tax bills after they’ve come after you, you will be one of those cases that a revenue officer will pay attention to. If you’re thumbing your nose at them, they may even refer your case to their criminal investigations division.

 

About IRS Medic

Anthony Parent is the founder of IRS Medic at Parent & Parent LLP, a practice of tax attorneys that works to resolve tough tax problems for businesses and individuals in the US and overseas. He helps people with issues in avoiding tax liabilities. These issues can range from unfiled taxes to audits, liens, penalties, other federal and state agency tax actions and business recovery. Attorney Anthony Parent founded the firm in 2003 to help clients deal with difficult tax problems. 

 

If you have a tax issue that you need assistance with, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.

 

 


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