What You Should Know About Liens and Levies

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DARRIN T. MISH:  Good morning I am Darrin T. Mish THE IRS Solution Attorney.

KATRINA MADEWELL:  And I’m your co-host Katrina Madewell, thank you so much for joining us today.

DARRIN T. MISH:  Today is actually a really special show and that’s because one of the, my very most favorite people in the entire world…

KATRINA MADEWELL:  We have a VIP guest.

DARRIN T. MISH:  He is sitting right next to me his name is Ryan he’s my son, he’s 14 years old and it’s just really cool to have him here in the studio today. He is a little bit shy and he doesn’t want to talk so we are going to respect that and maybe he is going to change his mind at some point during the show but if he doesn’t that’s ok because I am having a better time today because he is here.

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KATRINA MADEWELL:  Me too, I’m glad to have you Ryan. Maybe if your dad says something over the air you will want to chime in a little bit and say something.

DARRIN T. MISH:  Yeah he is probably going to correct me you know cause that’s kind of how things go.

KATRINA MADEWELL:  Oh that’s my son Nick, you guys would get along great.

DARRIN T. MISH:  One of the coolest things about Ryan, there’s a lot of cool things about Ryan but one of the coolest things about him is that he, at about the age of 10 or so, we were driving home from the office one day and he was working with me and he was talking about someday he was going to take over the firm. He had said things like that many times and finally I looked at him and I said do you really want to, you know, go to law school…

KATRINA MADEWELL:  How old was he?

DARRIN T. MISH:  He was about 10 at the time and, yeah, he said dad I’ve been telling you that I want to come work at the firm for years now. So that’s the plan for now, is Ryan’s going to come over and take over the firm at some point in time.

KATRINA MADEWELL:  Well that has to feel good. It’s better than your kids going no way do I want to be an attorney.

PAT GEORGE:  Well that was 4 years ago how does he feel now?

DARRIN T. MISH:  Well he is still on the path, he got into a very special high school program where he is going to have two years of college done before, you know, when he graduates. And the plan is to go to University of Florida, go Gators, and he wants to go to Levin College of Law at Florida as well. I like that plan because it is going to cost a lot less money than if he goes to someplace like I did.

KATRINA MADEWELL:  There you go learn from dad. He has a lot of experience.

DARRIN T. MISH:  Learn from dad’s mistakes.

KATRINA MADEWELL:  So we have a great show lined up today and if you have never caught the show before, Darrin, being the expert, and me, being the co-host that makes the show move along and adds a few of the little side jokes in there. We talk all about IRS issues, problems and the solutions more importantly. So your topic that you lined up for today is awesome because Liens vs Levies. We’ve talked about that on the show how people kind of interchange those and they mix them up.

DARRIN T. MISH:  For sure. The American public rightfully not thinking about tax problems all the time, which is good for them, it just happens to be my life. I get to think about tax problems pretty much 24-7 it seems like. The public uses those terms incorrectly and interchangeably, so there are big differences between Liens and Levies and those are some of the things that we are going to talk about today is the difference and what they are and how to deal with them and how to get rid of them if you can.

KATRINA MADEWELL:  So what is the difference between a Lien and a Levy? Just right off the bat.

DARRIN T. MISH:  Well a Lien is, it’s a document that is filed usually in your county clerk office, in Florida it’s filed in your Clerks office and in other states it’s filed in the recorder of deeds or in…it’s funny…

KATRINA MADEWELL:  Public records.

DARRIN T. MISH:  Orange County, Florida can’t be like the rest of the state. They  call it the Comptroller over there but….

KATRINA MADEWELL:  Really that’s a little funny.

DARRIN T. MISH:  Yeah it’s interesting like the whole state, as far as I know, if they call their Clerks office the Clerks office, but in Orlando they call it the comptroller. But a Lien is just notice to the world that you owe a tax debt….

KATRINA MADEWELL:  Or that you owe somebody money.

DARRIN T. MISH:  Yeah well a Lien in general is you owe somebody money but in this context a Federal Tax Lien or a notice of Federal Tax Lien as it’s correctly called is notice to the world that you owe the IRS money.

KATRINA MADEWELL:  Uncle Sam.

DARRIN T. MISH:  What it does is that Lien actually attaches to all of your property, real and personal wherever it may be. Now let me right that down cause I just went lawyer on you right.

KATRINA MADEWELL:  Yeah that’s right.

DARRIN T. MISH:  Ok so it attaches to all….

KATRINA MADEWELL:  See I don’t even have to catch you anymore you just catch yourself it’s great.

DARRIN T. MISH:  So real property as you know because you are a realtor is….

KATRINA MADEWELL:  Now see you even got that right.

DARRIN T. MISH:  Real property is real estate, it’s land, it’s your house, it’s real estate. So that’s what real property is. Personal property is all your stuff so right here in the studio we have one of those like shaker cups you know that’s personal property, I’m looking at an IPhone that’s personal property, these headphones that we are wearing so we can talk that’s personal property. Personal property is basically everything else. So it attaches to all of your property real and personal wherever it may be and I’m fond of saying it even attaches to your socks and underwear in your dresser. It attaches to everything literally.

KATRINA MADEWELL:  I just want to know the day that you actually have the IRS attach a Lien on someone’s underwear. I’m just saying.

DARRIN T. MISH:  Well literally if you take it really seriously it does. It attaches to everything.

KATRINA MADEWELL:  I mean Pat can wear…..

PAT GEORGE:  That is some expensive underwear out there. It’s Father’s day coming up and I always, I don’t just ask for the 3 or 6 in a pack of Fruit of the Loom. I ask for the Tommy Johns stuff that’s $45.00 a pair…

KATRINA MADEWELL:  I saw the headphones go on, the light light up like oh Pat’s got something to say about underwear.

PAT GEORGE:  Oh yes.

DARRIN T. MISH:  That’s not exactly where I thought he was going to go with the underwear but…

PAT GEORGE:  Underwear is expensive nowadays.

DARRIN T. MISH:  I’m glad that’s how he went, you know, cause he could of gone the other way you know it’s Father’s day therefore underwear……

KATRINA MADEWELL:  Alright that’s the Lien vs the Levy.

DARRIN T. MISH:  Ok so let’s talk about how does a Lien get filed. What happens is when you file a tax return and there is a balance due on that, technically you have 10 days. What happens is the IRS will send out a notice and you have 10 days to pay the debt and after….

KATRINA MADEWELL:  Whether it’s 50 bucks or 50 thousand or 500.

DARRIN T. MISH:  Or 50 million, right, you have 10 days to pay the debt. So technically there is something called a silent tax lien. If you don’t pay the debt after 10 days you know on day 11 technically there is something called a silent tax lien and what that means that the IRS still has a priority, they just haven’t gotten around to filing the actual official tax lien. So they wouldn’t file title on land or anything like that but it could come to plan on certain other issues particularly in the bankruptcy context but the IRS will eventually file what is called a Notice of Federal Tax Lien in the clerks office after they have given you proper notice.

KATRINA MADEWELL:  How often does that usually happen? I know you say within 10 days but I can’t imagine they are actually that prompt to actually file the Lien.

DARRIN T. MISH:  Man, it’s all over the place. I’ve seen it happen within, you know, a month and I’ve seen people with large tax debts that they have owed for over 10 years and they have never got a Lien. So it’s kind of all over the place. There are written procedures or standard operating procedures when they are supposed to file Liens and things like that.

KATRINA MADEWELL:  We know how that goes.

DARRIN T. MISH:  Yeah it doesn’t always work out. So sometimes you can take advantage of the fact that they haven’t filed a Lien and in certain circumstances but really what happens it the IRS will eventually send the Lien, they will record it, send it to the clerk to record it and then they will send the tax payer notice and this is kind of interesting thing that they do, they will send the tax payer notice that they filed the tax Lien and then you get your appeal rights. So like the horse is already out of the barn at that point.

KATRINA MADEWELL:  And the funny thing about public records is like, for example, we are talking about Liens today but it could be a judgement, it could be anything with public records, it’s not like the Clerks office will notify you unless you have a public record filed so this could, if someone is just ignoring their mail and there is a pile of stuff from the IRS that they are not opening they could very well have Liens all over their credit and attached to their social that they don’t even know are there.

DARRIN T. MISH:  I would say somewhere between 60 and 80% of prospects that come into the office and we are talking about their tax problems do not know that there is a Federal Tax Lien filed against them.

KATRINA MADEWELL:  So they don’t know and then you are saying there is.

DARRIN T. MISH:  Usually I have a copy of it in my hand and I say let’s talk about this you know that kind of thing.

KATRINA MADEWELL:  So they are like, Oh I have a tax lien, I just thought I had a bunch of mail. I didn’t know.

DARRIN T. MISH:  And I think one of the reasons is number 1 in Florida is sort of a transient sort of state and what I mean by that is not that we are all living under bridges here it’s that…

KATRINA MADEWELL:  It’s kind of how it sounded.

DARRIN T. MISH:  That’s not what I mean, what I mean is that we move more often than people in other states do. It just seems like that’s the case, like for example, in California because of the property tax laws and stuff you buy and house and you  live there until you die pretty much that is how it works. In Florida it’s, I think, well you are in real estate.

KATRINA MADEWELL:  Every, you know, 7 years you just kind of see that number drop back to closer to 4 and then they have these other things like portability that make it even more appealing because if you have been in that house for 40 years and decide that you want to leave you can that tax savings with you to your next place.

DARRIN T. MISH:  Yeah, so what happens is the IRS only knows what your address is from your last filed tax return right?

KATRINA MADEWELL:  And if you haven’t filed in 20 years.

DARRIN T. MISH:  Exactly so we talk about this all the time.

KATRINA MADEWELL:  Why don’t they like, I don’t understand why they don’t, how they can’t pull DMV records like why aren’t they intermix, just not that sophisticated?

DARRIN T. MISH:  Well we are going to go back to, and I say these things a lot, and that is the government is over grown, bloated, inefficient. They are just not that good at what they do. So they are not, I mean they can access DMV records because we see it all the time in the context of them looking for assets because they can find tags and they can find vehicles that tax payers don’t disclose and what not but I don’t know why the address isn’t tied into one central system it’s just not. So what happens is my client hasn’t filed a tax return in 6 or 10 years right and back then they lived at a different address often in a different state because, you know, every day we’ve got people moving from Indiana, Michigan, you know, New York all those, New Jersey, all those places, and so that’s the last known address that the IRS has and then the IRS sends the notice of the Federal Tax Lien to the last address and the tax payer never gets it.

KATRINA MADEWELL:  We find a lot of times in real estate when we end up pulling credit we are like oh yeah what about this Federal Tax Lien there, let’s talk about this and they don’t know.

DARRIN T. MISH:  Yeah that is why I like to network with you guys, cause you run into the people that I can help.

KATRINA MADEWELL:  Exactly. Well you are listening to the IRS Solution Attorney show, if you have a question we will take your call we are talking all about Liens vs Levies this morning but feel free to chime on in if you have a question, comment otherwise 888-404-1010, 888-404-1010 we are here to help we will be back in a minute.

(commercial break)

DARRIN T. MISH:  Leave it to Pat George.

KATRINA MADEWELL:  Back there keeping it real.

DARRIN T. MISH:  Yeah.

KATRINA MADEWELL:  Oh ok you know what this is Austin Powers.

DARRIN T. MISH:  Oh. Leave it to Pat George to keep it interesting, lively.

KATRINA MADEWELL:  What is he saying?

PAT GEORGE:  He reminds me of Austin Powers.

DARRIN T. MISH:  Oh

KATRINA MADEWELL:  What’s he say what is the famous line from the movie “Am I sexy baby”  what is it, what does he say is that it?

PAT GEORGE:  “Yeah baby”

KATRINA MADEWELL:  “Yeah baby” that’s it. Something like that. And one million dollars remember?  The bald guy.

PAT GEORGE:  I’ll save you one million dollars.

DARRIN T. MISH:  That’s what I remind you of.

KATRINA MADEWELL:  He’s close. Well you are listening to the IRS Solution Attorney show and this morning we are talking about Liens vs Levies and we have our VIP guest in the studio this morning Ryan.

DARRIN T. MISH:  That’s Ryan Mish.

KATRINA MADEWELL:  Mr. Ryan Mish.

DARRIN T. MISH:  He is going to be a freshman this year pretty excited about that.

KATRINA MADEWELL:  And that’s your host with the most Mr. Darrin Mish he is the attorney answering those politically correct questions and I am the non-attorney I can say all the stuff he can’t say.

DARRIN T. MISH:  I don’t think they are politically correct questions.

KATRINA MADEWELL:  Well legally correct is that a better term?

DARRIN T. MISH:  Legally correct, that’s way, way better because if you’ve known me for any length of time you know I’m not exactly the most PC person.

KATRINA MADEWELL:  Yeah I usually try to pipe down those political views on the show to keep a little mild.

DARRIN T. MISH:  You got to keep it real right? We are not talking about politics, we are talking about taxes, we are talking about the IRS, so let’s talk about what happens if they actually record a Federal Tax Lien. Is that good, bad what does that mean right?

KATRINA MADEWELL:  Well we talked about, also Lien vs Levy real quick and we explained it in the first segment but…

DARRIN T. MISH:  Ok here is the difference between a Lien and a Levy. I never did define Levy actually. So a Lien is where they file the public record that you owe the IRS money and it attaches to all your stuff, all your real property which is land and your personal property which is all your stuff. A Levy is actually a seizure it’s not like an epileptic seizure it’s like a taking, it’s where the IRS can come and take your stuff.

KATRINA MADEWELL:  I think everybody probably is familiar with those. Government seizure sales like where they are selling the corvettes and the boats and all the stuff they got from the drug dealers right?

DARRIN T. MISH:  Incidentally I’ve never had, well can I say never almost never had, any clients that actually have their stuff seized, definitely had clients that had bank accounts, bank seizures, bank levies and wage garnishments but I don’t think I’ve ever had a vehicle actually seized by the IRS even though they  love to do that. Revenue officers I think secretly love to go out there with a tow truck and…

KATRINA MADEWELL:  Do they really love to do it just because?

DARRIN T. MISH:  I think they like to do it because it’s different and they don’t get to do it all the time. I did have a case one time….

KATRINA MADEWELL:  Hey wait, when you get done explaining this story you are going to have to go to the foundation of that so I can draw a mental picture of what you are talking about, but go ahead.

DARRIN T. MISH:  Ok, so in this story it will help you. I had a client, I was representing a corporation, and the corporation had a large tax debt, say 100 grand or something like that, and the corporation was defunct, it had no revenue coming in and it had no expenses going out but it did have a free and clear high end Corvette. Not like the Corvette that you just buy that’s like stripped down this was a Corvette….

KATRINA MADEWELL:  Where’s the music, Pat, ” Little Red Corvette” where’s it at?

DARRIN T. MISH:  That would really tie in right now.

KATRINA MADEWELL:  I know he’s asleep back there.

DARRIN T. MISH:  He’s on his cell phone like everybody else nowadays. But anyway, there was this high end corvette and the owner, the man that was the shareholder of the corporation, told me that the Corvette could do like 150 mph, I said so how do you know that?  And he said cause I’ve done it on Alligator Alley, ok mental note, stay in the right lane when you go across alligator alley. I don’t want any part of that. So there was a revenue officer assigned to the case and the revenue officer was just salivating, told me he was salivating, he was going to go out there and he was going to hook that red Corvette up and he was going to seize it. So eventually what we had to do was, we had to cut a special deal with the IRS to buy that car back because if you think about it if the IRS seizes that car and they sell it at auction are they going to get true fair market value?

KATRINA MADEWELL:  No way.

DARRIN T. MISH:  No, not even close. They are going to get some pittance for the stuff and it’s just not going to be worth it at all.

KATRINA MADEWELL:  So did they actually seize and they bought it back was that like the technical?

DARRIN T. MISH:  No, what we did is we peremptorily gave him the value of the Corvette before it actually got seized, or at least it wasn’t the entire value it was like on our agreed upon value just on the low end.

KATRINA MADEWELL:  So you are talking about these revenue officers that just can’t wait to take the tow truck out there like it’s a scare tactic like do they really circle the building in a tow truck or I’m just trying to imagine this.

DARRIN T. MISH:  Ok let’s not give them any ideas cause I have not seen that actually, if I was a revenue officer I would probably still be like that, but I’m not so that’s a good thing that I’m not a revenue officer. No they don’t do that, but sometimes they will talk about it you know especially more not so much in there, I have never seen them even threaten to take a tax payers primary vehicle that they go to and from work but this happens more often in context when you are representing a company that owes payroll taxes and we talked about payroll taxes they are very serious in the past and some companies just have fleets, just normal. If you are an air conditioning repair company you are going to have a fleet of trucks, if you are a construction company you are probably going to have a fleet of trucks and so on and so forth. In those cases, they often won’t want to go and try to seize assets to pay the debt.

KATRINA MADEWELL:  What’s the percentage would you say when you talk about Liens vs Levies roughly, what percentage of debt to the IRS would you think gets a Lien actually filed compared to a Levy which is the taking of the stuff in seizure?

DARRIN T. MISH:  It’s pretty common to see Liens filed on every tax debt that exceeds maybe 25-50 thousand dollars, you know if you are in 6 figures you are probably Liened at that point so that would be a lot of it. I can’t tell you the percentage because there’s, I would guess there is more people just more people total that owe under $25,000 then owe over $25,000 right?

KATRINA MADEWELL:  Well we certainly see Liens on the credit reports by far a lot many of them are less than $25,000 more often than over.

DARRIN T. MISH:  Yeah you see…

KATRINA MADEWELL:  I guess they figure if they owe that kind of tax debt then they are not applying for a mortgage so that could be a good thing.

DARRIN T. MISH:  I think what happens on those low, on those small Liens is, let’s say  the person already owed $25,000 and so they got Liened for that 25 and then time goes on and there’s a couple more years that they owe money and so let’s say they owe another $7,000 and so they will file that subsequently  but that could be 2 or 3 years later.

KATRINA MADEWELL:  So they keep stacking the bill and then they file all at once.

DARRIN T. MISH:  Yeah and they do it because it protects, I think the real reason they do it is because it protects the IRS’s interest in their assets for bankruptcy purposes.

KATRINA MADEWELL: I think that’s what happened to one of our clients so if you have time maybe we will chat about that at the end of the show.

DARRIN T. MISH:  Yeah the one that we talked about yesterday?

KATRINA MADEWELL:  Yesterday yeah.

DARRIN T. MISH:  So…

KATRINA MADEWELL:  So where were we tax Liens?

DARRIN T. MISH:  We are talking about the effects of a recorded tax Lien and it’s got some really nasty effects and consequences for people who have tax Lien’s filed against them. I say that number 1 it goes on your credit report and I’ve seen, you’ve probably seen this to, I’ve seen people where it knocked there score down by 50 points.

KATRINA MADEWELL:  Oh no a tax lien is going to be I’d say at least a 100.

DARRIN T. MISH:  So not only that but I’ve seen people that still had over 700 scores…

KATRINA MADEWELL:  Depends on how old it is.

DARRIN T. MISH:  And, but the problem really is that in the mortgage context no one is going to loan you money for a house.

KATRINA MADEWELL:  Well they will they are just going to tell you that you have to satisfy it likely before you close.

DARRIN T. MISH:  Right well that’s what I mean, no one is going to loan you money on a house with the Lien still in effect. I’ve seen it, I saw it back in the wild west days of real estate, you will never guess which company really did that?

KATRINA MADEWELL:  Oh I probably would.

DARRIN T. MISH:  Starts with a C and is owned…

KATRINA MADEWELL:  They are not around anymore, Countrywide?

DARRIN T. MISH:  Yeah…

KATRINA MADEWELL:  I knew it.

DARRIN T. MISH:  So that’s kind of a funny story, it was actually a refi situation and the client came to me and said look we are in refi and the mortgage company said they are going to leave the Lien in place and I’m like they are crazy.

KATRINA MADEWELL:  Well you know with Countrywide back in the day when I owned mortgage companies they did do some things like that because they were already holding the Lien.

DARRIN T. MISH:  And the legal reason why that it’s crazy is because that tax Lien jumps in front of that mortgage at that point especially in a refi situation, it jumps in front of it.

KATRINA MADEWELL:  It’s already in front of it. But.

DARRIN T. MISH:  Yeah it’s really crazy so they did it and but I haven’t seen it happen since and that’s probably been what 8-9 years ago.

KATRINA MADEWELL:  It’s kind of crazy you have to bid the modification and just leave that existing mortgage in place, that’s what I would do.

DARRIN T. MISH:  Yeah you could definitely do that and that’s one of the things that you could do if you have a Lien, a tax Lien is, there is actually 2 different mechanisms to do it, one’s called a subordination and one is called a certificate of release and it’s really not that interesting of a distinction but you just know that you have to do a Lien subordination if you have a tax Lien in place and you want to refinance.

KATRINA MADEWELL:  Which that could get a little bit messy like from the mortgage perspective when you have a subordination like we will see this a lot where someone wants to leave the first Lien in place, they have one or two and then what happens the next Lien moves up the Lien line so the subordination allows a new mortgage to jump ahead of the existing loans. And they have to agree to that and they don’t always do that.

DARRIN T. MISH:  Yeah I don’t think I have ever lost a subordination attempt with the IRS, but they usually want to get paid, you know they want to get paid something and I used to think when I was younger and less experienced I used to think they wanted to get paid some significant amount and that’s not always the case, usually $500 or a $1000 will satisfy them for them to go ahead with the subordination.

KATRINA MADEWELL:  They will take it how they can get it.

DARRIN T. MISH:  Yeah, especially if you could sort of paint a picture that the subordination is a net gain for the IRS for example if you are doing a refi and you are going from 8% to 4% or something like that is going to understand, well often times will understand and go along with it.

KATRINA MADEWELL:  Is there any other issues that you see with regards to other then credit reporting obviously and getting loans and that kind of stuff, do you see anything else like any other effects that are major for someone if they get a Lien filed?

DARRIN T. MISH:  Well you know there’s, when we come back we can talk about the differences but you can definitely screw up a bankruptcy  for example and there’s different, some different negative effects that can happen with a tax Lien but the credits really the primary one that people think about.

KATRINA MADEWELL:  Well you are listening to the IRS Solution Attorney show with Mr. Darrin T. Mish, I’m your co-host Katrina Madewell in the studio we have Mr. Ryan Mish he’s also joining us as our VIP guest and if you have questions you can call us at 888-404-1010, 888-404-1010 and on the topic by the way you can get your free credit report  every year at annualcreditreport.com and I’m sure if you have a tax Lien it will show up on that and Mr. Mish can help you out.

(commercial break)

DARRIN T. MISH:  During the break Pat George our producer looks at me Darrin you are going to love the music that we are coming back to. I don’t know how he knew that but I actually do love Led Zeppelin.

KATRINA MADEWELL:  And I actually have to give him credit because I called him a total slacker cause he didn’t have Prince lined up but you know you are forgiven now it’s pretty good.

DARRIN T. MISH:  I think Led Zeppelin was one of these most influential bands of the last century, I mean they just have the unique sound that’s only there’s, no one’s ever  been able  to even come close  to that I don’t think.

KATRINA MADEWELL:  That’s true, agreed.

DARRIN T. MISH:  So we are talking about the differences between tax Liens and Tax Levies and so far we have been talking a lot about Liens and before the break you had asked me the question well what else then harming your credit….

KATRINA MADEWELL:  Yeah what are the ramifications?

DARRIN T. MISH:  And one of the bigger ramifications that it has is it makes it really hard to borrow money, you know we kind of touched on that earlier but I’m not even sure you could get a credit card but I know that you are not going to be able, at least without dealing with the Liens, I know you are not going to be able to buy real estate and then there’s…

KATRINA MADEWELL:  And even with rentals to be honest with you Darrin we’ve seen that pop up because what happens is you know you have someone on the other side of it that is a you know they are a property manager and there not sure what tax lien goes with what so at any point that tax Lien could require some type of repayment and they don’t know how much that’s going to be and it could affect your ability to pay rent.

DARRIN T. MISH:  Especially if…you know I hadn’t really thought of this before but especially if the numbers are really big. You know sometimes the IRS is in a situation where the tax payer doesn’t file tax returns so they file those for them and those are called substitute for returns and when they prepare substitute for returns those aren’t realistic tax figures, they’re kind of inflated and made up and everybody in the business sort of knows that and it wouldn’t be unusual at all to see a tax Lien for $250,000. Now let’s just kind of think about the rental application at the apartment and you are a guy making $80,000 or whatever 100 grand or whatever the number is, making decent money and then they run your credit and there is like a $250,000 tax Lien, somebody that is making the decision is going to be like that looks like a lot of money to me.

KATRINA MADEWELL:  Well you know what happens, Darrin, is a lot of times the owner gets the final decision but then you have somebody like me that’s going to get all the data and then we are going to give it to the owner with our recommendation and sometimes our recommendation may be, hey charge them first, last, security deposit and I think they will be ok…and pay the rent. And there’s other times there are like no I wouldn’t rent to them and then they do anyway and I’ve seen those turn out really bad but I can tell you that a $250,000 tax Lien they probably would have a hard time getting a rental.

DARRIN T. MISH:  Yeah because to a normal person it doesn’t work in the system all the time it just looks like a huge number and it’s just one of those things that’s gonna scare away a lot of people.

KATRINA MADEWELL:  And I mean realistically if someone has a $250,000 tax debt the reality is at some point they could start seizing stuff, they could require repayment. You know there could be a payment that populates in there that is higher then what they are paying in rent.

DARRIN T. MISH:  Yeah you know theoretically you know the good thing about being a landlord is that people need a place to sleep and it’s usually a pretty high priority on people’s list. My clients have a tendency to pay their rent or their mortgage before they pay their tax debt, for sure, I could see how somebody who is making that credit worldly sort of decision could come up to that conclusion. But those are the things that tax liens really do is they just kind of impede a tax payer’s wishes, what they want to do in life financially. There is another big one we hadn’t talked about is it makes it really hard to sell the property so it’s a, you know, you got a house and let’s say you are slightly underwater or your even on the house well you can’t really easily without dealing with it somehow, you can’t really sell that house because there is this lien recorded and when you get to the title company and hopefully it doesn’t happen on the day of closing. I’ve seen it happen.

KATRINA MADEWELL:  Well it’s not the day of closing, but you know when something like that comes up, like if the seller hasn’t disclosed it or maybe they don’t even know there’s a tax lien there for some reason when they start the title search that’s when it’s going to come up because sellers we are not pulling their credit unless they are buying something else. Like if they are saying hey I’m moving out of state or I’m doing this or I’m doing that it wouldn’t come up till the title search came through.

DARRIN T. MISH:  You know, recently we sold our house and on our first attempt there was, I don’t think it was a tax lien, but there was something you know sort of analogist to a tax lien, and they didn’t find it until 3 days before closing and it was one of these things that was just fatal, there was no way to save the deal, it was impossible and that whole deal fell through and that really messed with our plans.

KATRINA MADEWELL:  A similar scenario with the one I called you on yesterday.

DARRIN T. MISH:  Yeah it is kind of a similar scenario. Let’s talk about Levies because we are running out of time here in the show, not just here in the segment but in the show. So Levies are seizures, that’s when the IRS can file, you know they can go ahead and seize your income, they can seize your bank account and they can’t just do that without following what we call due process. And I’m trying to simplify this because I know you are going to bust my chops if I make it to complicated.

KATRINA MADEWELL:  If my eyes start glazing over then you are like wait a minute let me back up and regroup and explain.

DARRIN T. MISH:  Yeah there is constitutional guarantees in our constitution and one of those is that you will be granted due process of law, now what does that mean?  That means that the government…

KATRINA MADEWELL:  I’m hearing like a fair shake.

DARRIN T. MISH:  Yeah the government cannot just unilaterally make a decision, make it so and like seize your stuff. I mean in this context that’s what it means, you have to have an opportunity to you know to complain or to be heard about why this proposed action of levying your stuff is inappropriate.

KATRINA MADEWELL:  So you can challenge it or dispute it or just agree with it formally.

DARRIN T. MISH:  Yeah, so what happens is the IRS has to send a certified letter to the last known address, see what the problem here with having the last known address in New Jersey or whatever. It’s a really good idea if you do move even if you have a tax problem to file a change of address form with the IRS, it’s kind of counterintuitive but if you don’t get the notices then what’s going to happen is you don’t know they issued this letter LT11 or this letter 1058 which is called a final notice of intent to Levy you won’t know that the letter came because it got sent to your last address and then….

KATRINA MADEWELL:  So if it goes to that last address and you have to sign for it and you are not there it’s going to get returned back to the IRS isn’t it?

DARRIN T. MISH:  Yeah it’s going to go right back to the IRS, but that’s not an excuse, so then after 30 days the IRS has the legal right to seize your bank account, to put a wage garnishment on your wages to seize your stuff. So what those are the scenarios…

KATRINA MADEWELL:  But how are they going to seize your stuff when they don’t know where you are?

DARRIN T. MISH:  Well because, remember the Patriot Act, that past after 2001?

KATRINA MADEWELL:  Ok, yeah.

DARRIN T. MISH:  So when this was proposed I was like, this is a very bad idea, this, I know why they’re, why the rationale was, this is going to fight terrorism, no it’s a really bad idea. Now every single bank account is attached to a Social Security Number so they just run a quick search, he used to live in New Jersey, now you live in Nebraska…

KATRINA MADEWELL:  Ok so why couldn’t they do that search initially when they go to send out those certified notices?

DARRIN T. MISH:  I can hear the bureaucrats saying right now not my job.

KATRINA MADEWELL:   I’m just saying.

DARRIN T. MISH:  I can hear them saying it in my head, not my job so….

KATRINA MADEWELL:  But it seems like if you are going to make that effort and you are going to give the tax payer reasonable chance to appeal it, fight it, respond to it wouldn’t you want to do that in advance?

DARRIN T. MISH:  So, that would be, that would be a really good thing to approach a Congressman or a Senator and say we need to pass this bill to make it, make it so the IRS has to do a reasonable search…

KATRINA MADEWELL:  Because if you are going to do it anyway why not get it in advance and send it to the address where they are and it seems like it would be a lot more productive for the IRS anyway.

DARRIN T. MISH:  Yeah, when you are going to sue somebody in civil court, if you can’t find them then there is a whole bunch of steps and hoops that you have to jump through to show that you tried to find them before you can sue them without them knowing about it. For example, I did a divorce many years ago, my one and only divorce, and the husband in the case was, he, you couldn’t find him and you have to search DOD records. You have to do all these things and eventually you can publish is some newspaper that nobody reads and print that nobody can read and then you have to show that you went through all of these steps. I think actually I’ve never thought about it until you just brought that up but I think that would be a good thing for the IRS to have to do especially with the technology that they have at their disposal now but to answer the other question how do  they find you if you move from Jersey to Nebraska is you now if you work in a wage earner job, you got W-2’s being issued which have your address on them by the way and so they know where to send the wage garnishment cause they have the name of the employer, if you are a 1099 guy there are 1099’s issued so they know where to send that levy. If you are banking anywhere in the country then there’s a Social Security number attached to that bank account so it makes it really easy to seize those things and that’s why those types of levy’s, wage levy’s and bank levies are the most common it’s because it can be all done electronically by a computer no human is involved in most of these cases and it just gets done sort of automatically so the moral of the story is if you get a final notice of intent to levy, letter LT11 or 1058 then you are going to want to go ahead and file an appeal and when you file the appeal….

KATRINA MADEWELL:  How many days?  30 days.

DARRIN T. MISH:  30 days and it’s 30 days from the date on the letter, doesn’t have to get there within 30 days just has to be postmarked but this is one of the instances where you don’t want to put a 48 cent stamp on it and mail it you want to go ahead and send it certified mail or some trackable way so that you can prove that it got there on time.

KATRINA MADEWELL:  So is this something that someone can do on their own or do they have to have an attorney send that appeal in like does it have to be written any sort of formal way?

DARRIN T. MISH:  There is a form, it’s a form 12153, that form is not terribly complicated to fill out, a taxpayer could do it themselves…

KATRINA MADEWELL:  But you can’t just send a letter you have to do like there form and send it in?

DARRIN T. MISH:  You know a letter….

KATRINA MADEWELL:  Just curious.

DARRIN T. MISH:  Requesting an appeal is probably ok because it kind of passes the test on what they were talking about but the letter has to be filed, has to be sent to a specific address on the letter, I would recommend using the form, the form is pretty much biographical, it’s like who are you, what tax year are you appealing and so on and so forth.

KATRINA MADEWELL:  So and what was that form number again and how do you search for it?

DARRIN T. MISH:  It’s a form 12153 and that is how I would search for it, you know Google that…

KATRINA MADEWELL:  The number 12153?

DARRIN T. MISH:  Yeah, it will come up for sure on a Google search.  But you file that and you send it within 30 days and then about 3-4 months after that you have a hearing with the IRS called a Collection Due Process hearing and you talk to somebody from IRS Appeals, that person is usually easier to deal with than the field level person at the IRS so that is why we file a lot of appeals and that hearing is typically telephonic, it’s really not, it’s like a telephone conversation and they are minor, usually short very short somewhere between 5 and 15 minutes short with a tax payer….

KATRINA MADEWELL:  When does that usually happen after you file that appeal and they set the date?

DARRIN T. MISH:  About 3-4 months after you send in the appeal notice and then usually what they do, what we use appeals for is we use them to just settle cases if we are trying to do an installment agreement that is where we are going to do it, if we are going to do an Offer in Compromise which is a deal to settle for less that is where we are going to do it. That type of thing because those appeals officers technically called settlement officers, they have more, they have more discretion, they have more authority and they are more about settling cases, that is there job is to resolve disputes.

KATRINA MADEWELL:  I guess they figure if someone is making the extra effort to put in the appeal then they have some vested interest to try and settle the case.

DARRIN T. MISH:  Could be, most of them have really good attitudes to you know they are all about settling cases. A lot of field level people not necessarily revenue officers but usually ACS which is the call centers, those people will often have really bad attitudes and they are not solution oriented, they are just you know pay me yesterday kind of people and they don’t have a lot of discretion, they can say they have a lot of discretion to say no, they have very little discretion to say yes.

KATRINA MADEWELL:  Now are they, just curious since it’s a formal hearing even if it is by phone are a lot of these people attorneys at the IRS office?

DARRIN T. MISH:  No not at the IRS office.

KATRINA MADEWELL:  They are just IRS agents.

DARRIN T. MISH:  They are called settlement officers and they are a higher pay grade then the field level people and so they have more experience and what not, they typically used to be revenue officers and they sort of been promoted into this settlement authority kind of deal but they are good people at appeals. I got nothing bad to say.

KATRINA MADEWELL:  Well you are listening to the IRS Solution Attorney show if you missed and part of today’s show on Liens vs Levies you can catch it on your website and also on the APP.

DARRIN T. MISH:  Yeah the app released just the other day and so the app is on, in the android store and in ITunes.

KATRINA MADEWELL:  And how do they find those?  The IRS Solution Attorney?

DARRIN T. MISH:  You can actually search for my name Darrin Mish or the app is actually called the IRS Problem Solver. There is a legacy reason why it has a different name but that’s the name of the app and all of the shows are available there and you can listen to them in your car on your way to work or on your way home, anywhere around the country.

KATRINA MADEWELL:  When we come back in a minute we are going to go over a couple of questions that we have for listeners, we will be back in just a minute.

(commercial break)

KATRINA MADEWELL:  Sing it Darrin.

DARRIN T. MISH:  You know my brain wants to sing.

KATRINA MADEWELL:  But I cannot sing I will not do that.

DARRIN T. MISH:  It’s a really bad idea to sing I think.

KATRINA MADEWELL:  Me to. Talk about a way to have somebody change the channel. That would do it.

DARRIN T. MISH:  Like right now. It’s good bumper music though.

KATRINA MADEWELL:  Well you are listening to the IRS Solution Attorney show, great job back there Pat George with the music and Mr. Darrin T. Mish is the host of the show and I am your co-host Katrina Madewell. Our VIP guest today is Ryan Mish which doesn’t want to say anything but he is listening, very attentively to the show.

DARRIN T. MISH:  14-year-old Ryan Mish, he is here in the studio.

KATRINA MADEWELL:  And our topic for today was all about Liens vs Levies and if you missed any part of the show the whole thing, all of them are available via a podcast and on the new app.

DARRIN T. MISH:  Yep you could find it on the podcast or you can find it on the new app which is the IRS Problem Solver on ITunes and Android, coming to Windows phone stores soon.

KATRINA MADEWELL:  Does anybody even have one of those things?

DARRIN T. MISH:  That is what my reaction was but my developer insists yes there are many people who use Windows phones and good for them I’m sure they are wonderful. I’m sure they never crash, I’m sorry, had to say that.

KATRINA MADEWELL:  I don’t know that I would buy one but you now if you disagree then by all means call up and tell us about it 888-404-1010 we will be happy to hear your case.

DARRIN T. MISH:  I think we have a couple of questions today.

KATRINA MADEWELL:  We do we actually got a question, I like this one Matt sent a question that says ” What will hiring your office help me with?  Can’t I handle this matter myself?”  but he didn’t say what the matter was so I guess he could with some.

DARRIN T. MISH:  I think I might even know who Matt is in this instance but it depends you know it really does and I have talked a plenty of people every week where I tell them you know I really think you could handle this yourself it’s not…

KATRINA MADEWELL:  Give us a couple of examples.

DARRIN T. MISH:  It’s not cost worthy to hire me. I would say, you know if you owe…in fact a guy called yesterday he was kind of an old friend, he owes $10,000 to the IRS, ok there is no way that I could do much with that. I mean I could get him into an installment agreement but it’s kind of a form of how you think, he could get himself into an installment agreement and it’s not going to be an Offer in Compromise cause frankly he doesn’t owe enough money and the IRS is going to want him to pay the whole thing. So you know if you have a very small liability you don’t really need a lawyer to do that, you can just call the IRS, wait on hold for a couple of hours and they will eventually answer and then they will put you into an installment agreement. I say where it starts to make sense is if you are audited period, you should get some kind of representation for sure or if you owe over about $20,000 or if you have a bunch of unfiled tax returns it would make sense to hire an attorney to because most of the people who have unfiled tax returns are going to have significant balances so I think it would make sense to hire a lawyer in those cases. But it’s really hard, what do you expect a lawyer to say but other than it depends, it depends on what your situation is and how serious it is.

KATRINA MADEWELL:  Well they can call your office and ask and surely you will help them or point them in the right direction.

DARRIN T. MISH:  It’s almost like it was a commercial for that the phone number is 888-get-mish that’s 888-438-6474.

KATRINA MADEWELL:  This times out like that sometimes.

DARRIN T. MISH:  Or you can visit the website which is getirshelp.com.

KATRINA MADEWELL:  What’s your phone number one more time?

DARRIN T. MISH:  888-438-6474 that spells out 888-get-mish.

KATRINA MADEWELL:  So what do you think about talking really quick about the question I called you with yesterday cause I thought it was interesting and we touched on it a little bit earlier in the show but and I, this is probably another whole show for another day but I have a client, I’m helping her, she’s divorced, her ex-husband I think owned a business, had all this tax debt, probably 50 some dollars in tax debt…

DARRIN T. MISH:  50 thousand.

KATRINA MADEWELL:  Ok, and so she was protected under the innocent spouse rule.

DARRIN T. MISH:  Oh ok.

KATRINA MADEWELL:  And so what happened was when it went through the process and underwriting was matching up all this stuff, all the tax liens, yeah those tax liens to what the divorce decree showed believe it or not underwriting found a discrepancy of a thousand dollars for one year.

DARRIN T. MISH:  Yeah, so in that context she was forgiven for most of the years on the tax lien as far as I recall and there was one tax year where she still had some responsibility but the balance on the face of the lien was like a $1000 right?

KATRINA MADEWELL:  Right. I think it was that one particular year that they wanted to settle and we weren’t sure if the IRS was going to go, hey, we will take your money and we will apply it where we want to or, hey, we really need just this one year paid off to satisfy underwriting to get this to go through.

DARRIN T. MISH:  Now we got to get to the train wreck of the week, but the answer in that question was or the really important principle was, that a tax payer has a right to designate where a voluntary  payment goes so a voluntary payment is just a payment that you are making and it is outside of an installment agreement, outside of a levy you know outside of an Offer in Compromise, you get to tell the IRS where you want that money applied and in this case they are going to apply  it to that one 2006 tax year.

KATRINA MADEWELL:  The train’s back.

DARRIN T. MISH:  You are doing that just to try to knock me off.

KATRINA MADEWELL:  The train came back through.

DARRIN T. MISH:  The train.

PAT GEORGE:  The train hit somebody at the next intersection.

DARRIN T. MISH:  Ok, so this is the time to do the IRS train wreck of the week. This is the segment where we tell a story about somebody that came in as a train wreck and that they always leave with a happy ending. In this particular case I was representing a dentist and he had a really poor compliance history, he ended up owing $253,132.94. What we did we went ahead and filed an Offer in Compromisefor him, the Offer in Compromise is a program that the IRS has where you can make a deal to settle for less and I can’t remember how much we offered initially but knowing me it was low, a $1000 or something low and we did  that just so we could get into the game, so to speak, because it takes about a year or a year and a half  for the IRS after the offer is filed for them to go ahead and start working on the case so what happened is at the first sort of level the IRS came back and said no this is a full pay, he has the ability to full pay this tax debt and we really disagreed, so what we did was we went ahead and filed an appeal of the offer, it’s different but similar to the appeal we were talking about in the last segment of the show but we filed an appeal to offer and it took about, jeez awhile, 6 or 8 more months before we got our appeal hearing.

We got our appeal hearing and it was ultimately hard fought but we banged out a number of $58,218.

KATRINA MADEWELL:  So with the Offer in Compromise is it all going to be due at once or can they still make an installment payment on that?

DARRIN T. MISH:  In this particular case it was a cash offer which means, I don’t know why this is the case….

KATRINA MADEWELL:  Just curious.

DARRIN T. MISH:  They call it a cash offer which means it’s payable within 5 months of acceptance so he had to come up with 58 well a little bit less than $58,000 within 5 months of acceptance, the reason it was a little bit less than that was he already had 20% of that paid in.

KATRINA MADEWELL:  Is that the norm or do they ever do payments?

DARRIN T. MISH:  There is a type of Offer in Compromise where you can pay it out over a 2-year time frame but….

KATRINA MADEWELL:  They won’t take a lower amount will they?

DARRIN T. MISH:  Usually it’s double the amount of the Offer in Compromise…

KATRINA MADEWELL:  Yeah it’s good to be……

DARRIN T. MISH:  The time we do those 2 year offers is if the amount of the offer is based upon the value of assets not monthly income if that makes sense.

KATRINA MADEWELL:  Yeah.

DARRIN T. MISH:  So if it’s based on assets then it makes it really easy to go and spread that out over 2 years.

KATRINA MADEWELL:  So Glenn had one question “I received a notice from the IRS what should I do?”

DARRIN T. MISH:  Number 1 open it, number 2 read it, number 3 if it looks serious if it really scares you, you should call somebody and get some help with it.

KATRINA MADEWELL:  Call Mish. 888-get-mish.

DARRIN T. MISH:  That’s 888-get-mish. The app is called The IRS Problem Solver, get it on ITunes or android, download all the shows.

KATRINA MADEWELL:  We were having a blast with you today for the IRS Solution Attorney show we will be back here same time, same place next week. Don’t forget to check out the app The IRS Problem Solver for this week….

DARRIN T. MISH:  We’re out.

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