Celebrity Federal Tax Lien: NeNe Leakes

The “Real Housewives of Atlanta” cast member NeNe Leakes, whose real name is Linnethia Monique Leakes, recently had a Federal Tax Lien filed against her in the amount of $824,366.01 in unpaid taxes for the 2014 tax year.

 

As the Federal Tax Lien is of public record, this gives us the opportunity to review some facts about tax lien.

Date of Assessment.

According to the FTL above, the Date of Assessment was November 23, 2015.  This means on that date she either filed her 2014 tax return, or was assessed an additional amount upon further examination of her tax return by the IRS.  The Date of Assessment is the date which starts the Collection Statute for IRS collection – the IRS has 10 years from the later date of when the return was filed or there was a later assessment on the given return, to collect on that liability.

Late Filing Penalty.

NeNe may have filed her return late, given the Date of Assessment, which means that she may be subject to penalties for late filing.  The IRS has listed 8 facts about Penalties which may apply in NeNe’s case:

  1. Two penalties may apply.  If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.
  2. Penalty for late filing.  The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.
    Minimum late filing penalty.  If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.
  3. Penalty for late payment.  The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.
  4. Combined penalty per month.  If the failure-to-file penalty and the failure-to-pay penalty both apply in any month, the maximum amount charged for those two penalties that month is 5 percent.
  5. File even if you can’t pay.  In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. Use IRS Direct Pay to pay your tax directly from your checking or savings account. You should try other options to pay, such as getting a loan or paying by debit or credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.
  6. Late payment penalty may not apply.  If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.
  7. No penalty if reasonable cause.  You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time. There is also penalty relief available for repayment of excess advance payments of the premium tax credit for 2014.

Unpaid Balance of Assessment. 

The FTL for NeNe indicates that there is an unpaid balance of $824,366.01.  This does not necessarily mean this was the amount due on her tax return; this is simply the balance between tax owed and what she had paid when the return was filed.  Thus said, her current balance could now be far in excess of the unpaid balance of assessment.  Referencing the notes above, she could also have failure to file penalties and failure to pay penalties which can accrue to 25% each.

Celebrity Federal Tax Lien: TY DOLLA $IGN

The Internal Revenue Service recently filed a Federal Tax Lien against Tyrone William Griffin, Jr. known professionally as Ty Dolla $ign, an American rapper, singer, songwriter and record producer from Los Angeles, California.

The IRS filed the Federal Tax Lien for 3 separate years:

  • 2011 – $16,617.05;
  • 2013 – $54,626.91; and
  • 2014 – $109,725.39.

The IRS, claiming he owes roughly $180,969.35 will certainly pursue its claim against Ty Dolla $ign if he does not soon reach an agreement with the IRS.

Celebrity Federal Tax Lien: Nelly

The Internal Revenue Service, in August, filed a Federal Tax Lien against rap star Nelly for the 2013 tax year in the amount of $2,412,283.

According to a Washington Post Article in September, the rappers fans rushed to his aid:

The suggestion first came from SPIN, which did the math: In a best case scenario, using an estimated Spotify royalty payout per stream, Nelly fans would need to stream “Hot In Herre” at least 287,176,547 times to pay off the reported lien.

Celebrity Federal Tax Lien: Rick Ross Owes IRS $5.7 Million

The IRS recently filed a Federal Tax Lien against rapper Rick Ross in the amount of $5.7 million for the tax years 2012-2014, according to TMZ.  Billboard.com reports that Ross blames an “incorrect filing” by a “prior accountant” for the tax liability.

The rapper’s reps shared the below statement, “I’ve been fortunate enough to experience financial success on a large scale through both my music career and my many business ventures. With this type of financial success comes financial responsibility. As artists we are blessed to be able to make money, but on the same note, are held accountable for our federal tax obligations just like everyone else. I am fully aware of my current dealings with the IRS. This issue arose from an incorrect filing by a prior accountant for the 2012 tax year.”

He added, “My new team of accountants have corrected the prior filing, and as anyone who has dealt with the IRS understands, it is a process. We have already satisfied a large portion of these issues and I can assure you that we are working very closely with the IRS to bring a full resolution shortly and will continue moving forward in a positive direction.”

Pursuant to the above statements we can likely deduce that Ross’ accountants have filed amended returns – as he alleges faulty filings – and that his team is attempting to reach a formal agreement with the IRS to resolve the liability.

Hulk Hogan Settles $140 Million Gawker Verdict for $31 Million – IRS to Collect

Hulk Hogan recently settled his suit with Gawker for $31 million after four years of litigation.  Hogan brought the invasion of privacy suit over Gawker’s posting of a Hogan sex tape.  While a $31 million settlement seems like nice deal for Hogan, we cannot forget the legal fees and taxes owed to the IRS.

Attorney fees are often a surprising tax trap for many plaintiffs.  When a plaintiff uses a contingency Attorney, the settlement to is treated as 100% income to the plaintiff for tax purposes.  Some settlements are nontaxable (most personal injury cases) – involving physical injury.  However, in a case such as Hogan where there was no recovery for physical injury damages, the settlement is treated as taxable income to the plaintiff.

5 Tips to Avoid IRS Tax Scams

Recently scammers have been focusing on taxpayers.  They find them as the low lying fruit and susceptible to deception.  The reason being is that taxpayers often fear the IRS.  The Treasure Inspector General for Tax Administration has received notice of over 736,000 attempts to scam taxpayers since October 2013.  This has allegedly resulted into nearly 5,000 victims losing more than $23 million.

The most effective weapon against a scammer is knowledge.  Below are five tips to help avoiding scammers:

(1)    The IRS will never reach out to anyone via email.  If you receive an email from someone claiming to be from the IRS, do not reply to the message, open any attachments or click any links. Forward the email as-is to the IRS at phishing@irs.gov.

(2)    The IRS will rarely contact anyone by phone.  Many scammers are contacting taxpayers claiming to be IRS officials.  It’s important to know that a call will not be the first form of contact for the IRS.  First, the IRS will send you a letter or bill outlining any action you need to take.  A call will rarely follow.  Scammers often alter the caller ID to make it look like the IRS or another agency is calling.  If you receive a phone call from the IRS, take down the individual’s name and badge number, then call the IRS back at 800-829-1040 to determine if the IRS has a legitimate reason to contact you.

(3)    The IRS will not demand immediate payment. The IRS will not demand “urgent” payment or apply excessive pressure for any outstanding payments. For example, some scammers threaten to arrest, deport or revoke your license if a payment is not made immediately. If you owe tax, the IRS gives you the right to question or appeal the amount you owe. Phone threats are not how they enforce the tax code.

(4)    The IRS does not require you to pay a certain way. The IRS will not ask for credit or debit card numbers over the phone. Normally, scammers try to persuade the victim into sending cash, usually through a prepaid debit card or wire transfer.

(5)    The IRS does not ask for detailed personal information. This includes requests for PIN numbers and passwords or access information for credit cards, banks or other financial accounts.

Your IRS Questions Answered Here…

Question: I have a huge tax amount owing, the IRS is harassing me and I need help.  I got a quote from another company at a much lower price.  Why should I go with you?

Answer:  If someone quoted you a much lower fee, think about this: do you think an experienced tax attorney worth their “salt” would work for peanuts? – Especially given the fact that IRS Representation is a highly valued skill set.  You usually get what you pay for in this world we live in today. This is your financial life and the stakes are very high. If you needed heart surgery, would you shop around for the least expensive surgeon or would you get the very best you can find? The same holds true for dealing with the Internal Revenue Service. Having IRS problems can ruin all aspects of your life, your marriage, relationships with your children and family members, your employment, ability to buy a house, a car, money for retirement or even have a bank account.  You want the best possible person for the job, not the cheapest.

Your IRS debt doubles every 6-8 years due to the daily compounding effect of interest and penalties and the IRS has at least 10 years to collect from you to so hand this off to the lowest bidder in town is probably not a wise decision.  You’ll have peace of mind and sleep better at night knowing that we’re working hard on your case to get you the lowest possible settlement with the IRS!

IRS Has 10 Year Statute To Collect

Generally speaking, the IRS has 10 years to collect on an unpaid tax liability.  After this period, the tax liability is wiped from your account transcripts.  This 10 year Statute of Limitations is often referred to as the “Collection Statute End Date” or CSED.

The IRS does not go out of its way to let taxpayers know about CSED’s because there would be a broad incentive to put off collection as long as possible.  However, the closer your liability gets to the CSED, the more the IRS will pursue collection actions.

The 10-year period is supposed to begin when the tax was assessed. However, there are frequently disputes on that timing between tax debtors and the IRS.  Additionally, there are several instances which can toll (pause) the statute of limitations which include:

  • Filing bankruptcy
  • Filing an Offer in Compromise
  • Filing appeals
  • Filing lawsuit against IRS
  • Being out of the country for at least 6 months
  • Signing waiver to extend the CSED
  • Military deferments.