IRS Tax Debts and Real Estate Refinancing: How We Can Subordinate Your Tax Lien

If the IRS has a lien on a piece of property you own, whether it be your house, business, or a real estate investment, you are not allowed to refinance the property until you pay off the amount of the tax lien. Once the tax lien is in place, the IRS takes first position when it comes to any financial dealings. As the official lien holder, the IRS effectively announces to your other creditors and potential creditors that the federal government now owns first rights to all your property and its approximate value. With a federal tax lien on your home, you cannot sell, refinance, or purchase a new house or property until the IRS removes the tax lien.

Real Estate Tax Subordination

What if by refinancing your property, however, you will gain access to the financial resources needed to lower your interest rate or pay off part of the IRS tax lien? Will the IRS allow you to refinance under these conditions?  If you have Peter Stephan and the Tax Resolution Institute on your side, we can show you how to convince the IRS to subordinate their position on your property to a new lender. Such a key step forward will allow you to gain access to the needed financial resources to resolve your tax crisis.

In order to apply for the subordination of an IRS tax lien on your property, you must follow the extensive directions presented in IRS Publication 784 to the letter. If your paperwork is not in order, the IRS cannot even consider the request. Upon a proper application with the correct documentation, the IRS may still reject your request if the Revenue Officer determines value may exist to the government to deny the application or that the transaction is not legitimate. With extensive experience and expertise in filing such documentation with the IRS, Peter Stephan and the Tax Resolution Institute can place your request in such a position that it has the greatest chance to be accepted.

In the current challenging economic climate, the ability to subordinate an IRS tax lien on your property has become essential. Instead of going up 10-20% per year, California real estate has sunk an average of 41% since peaking in 2007. It is understandable that you are reaching out to lenders for help, but an existing IRS lien will cause a significant problem if you are attempting to restructure a loan, refinance or sell. By its very design, an IRS lien freezes you from taking any financial actions in relation to your property without “dealing” with them first.

On December 16th, 2008, the IRS announced a new policy on processing Federal Tax Lien (FTL) subordination in light of the economic climate and to aid distressed homeowners. “We don’t want the IRS to be a barrier to people saving or selling their homes,” said Doug Shulman, IRS Commissioner. Despite such reassurance, currently in the United States, over 1 million Federal Tax Liens are outstanding and more than 600,000 are filed annually.

A tax lien is a public document and is normally filed after multiple attempts have been made by the IRS to secure payment of the tax debt. If there is a tax lien against your private property and this describes your current economic situation, you may be able to subordinate the tax lien so you can get a loan that will help you reduce your interest rate or pay part or all of your delinquent IRS tax bill. When the IRS agrees to subordinate their first position, then a mortgage lender can move to the top of the list and will be more likely to refinance your home or your property, providing you with the financial resources you need.

If you have a tax lien, it is possible to lift that lien with the purpose of making a payment toward your tax liability. The subordination provides you freedom from a Catch-22 situation: The IRS wants to get paid but their tax lien is making it impossible for you to withdraw equity through refinancing. Here is an example of this process in action with the Tax Resolution Institute by your side:

You have a tax bill of $110,000 with equity in your home of $60,000. Your bank tells you that they will loan you $60,000 if the IRS agrees to allow them to remain as a higher priority creditor. You hire Peter Stephan and the Tax Resolution Institute to prepare an Application for a Certificate of Subordination of Federal Tax Lien. The IRS receives the request and agrees to subordinate the tax lien by issuing the certificate. The bank receives the Certificate of Subordination, completes the financing and you apply some or all of the refinancing proceeds to your delinquent tax bill. If you only want to refinance your property to obtain a lower interest rate (without paying the IRS a penny), the same methodology can be employed.

Afterwards, Peter Stephan and the Tax Experts at the Tax Resolution Institute can negotiate an Offer in Compromise or an Installment Agreement with the IRS for the remaining Federal tax liability. Once the tax resolution program is in place, the tax lien is lifted and your financial outlook can begin heading in the right direction once again. By making a deal that works for both you and the IRS, Peter Stephan creates a win-win situation that allows your tax nightmare to finally end.

Peter Y. Stephan

About Peter Y. Stephan

Peter Y. Stephan, executive director of the Tax Resolution Institute, has been helping people resolve large, complex payroll tax problems and personal income tax problems for over 25 years. Peter has written a book "The Ultimate Tax Resolution Guide" and speaks on Tax Resolution topics frequently.

The Tax Mess of Sarah Palin: Going Rogue with Her Income Taxes

Once called the rock star of the Republican Party, Sarah Palin has been treated like one on her book tour where she is promoting her just published memoir, Going Rogue: An American Life. In Michigan, over 1,500 people lined up in the cold to obtain their copy of the book and experience a few seconds of face time with the former governor of Alaska. Sarah Palin’s fervent supporters want the former Republican vice presidential nominee to run for president against Barack Obama in 2012. The question looming is whether her fan base would remain quite so fervent if they knew how Sarah Palin had gone rogue when it came to reporting and paying her income taxes. If Sarah Palin had chosen to have Peter Stephan and the Tax Resolution Institute on her side, such questions would never have arisen in the first place.going_rogue_sarah_palin_coverDuring her term as Governor of Alaska, Sarah Palin billed the state taxpayers for 312 nights spent in her own home during her first year and a half in office. She claimed a “per diem” allowance, intended to cover meals and incidental expenses while traveling on state business, while she was living at her own house in Wasilla. Sarah Palin also filed claims with the state for travel expenses to take her children on “official” out-of-town trips. The governor’s daughters and husband charged the state taxpayers of Alaska $43,490 for travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away. “Per diem” allowances received by an employee can be omitted from gross income if they constitute reimbursements for amounts that the employee could have deducted as legitimate business expenses. Such a deduction occurs only if the employee paid for the expenses out-of-pocket and has not been reimbursed. Sarah Palin demanded to be reimbursed for $60,441 of travel, meals, and lodging expenses, which would not be considered legal business deductions for any normal citizen.

Let us examine the specific part of the IRC — Section 274(m) (3) of the Internal Revenue Code forbids deductions for bringing spouses and dependents along on business travel unless the spouses and dependents (a) are employees of the taxpayer, (b) are traveling for a bona fide business purpose, and (c) would otherwise be entitled to deduct the travel on their own tax returns. Since Sarah Palin’s children are not her employees, their expenses are not legally deductible. As a result, she cannot exclude from her personal income per diems attributable to them. As for her own travel, Sarah Palin stumbled head first into more tax problems. Only travel “away from home” qualifies for tax deduction, and for this purpose, one’s “home” is generally the principal place of one’s business. In this case, the governor reportedly works out of offices in both Anchorage and Juneau. However, since she has only one state job, she can declare only one of those cities as her tax “home.” If Juneau is her tax “home”, she cannot exclude or deduct meals and lodging expenses incurred in Juneau or Wasilla. If Anchorage is her tax “home” which it should have been since it is the state capital and she was governor of the state, she cannot exclude or deduct expenses incurred in Anchorage or Wasilla as travel expenses.

Ultimately, the American tax code law that Sarah Palin ignored is that the cost of regular commuting between one’s residence and one’s tax “home” is not deductible, no matter how long the distance between them. For tax purposes, Sarah Palin’s excursions between the two are simply long-distance commuting. Her decision to live primarily in Wasilla does not provide her with a loophole when it comes to the IRC and filing her tax deductions. Why didn’t Sarah Palin’s advisors inform her of the specifics of the Internal Revenue Code? Most likely, Sarah Palin was not informed because her advisors did not know the IRC. With Peter Stephan and the tax experts of the Tax Resolution Institute by her side, Sarah Palin would have been fully informed. With the information under her belt, she would have been capable of making the correct and legal choices when it came to deciding upon the legality of her personal income tax deductions.

There is no real debate about the fact that the amounts paid for the children’s travel — $24,728.83 in 2007, according to the Washington Post — are taxable. Sarah Palin, who had her tax return done by HR Block, simply got the law wrong. Even if the state payroll tax division got the law wrong as well, this mistake does not do away with Sarah Palin’s unpaid tax liability. If Sarah Palin had contacted Peter Stephan and the Tax Experts at the Tax Resolution Institute, she would have been informed of the correct tax procedures and completely avoided her tax mess. To make matters worse because in politics there is such a thing as bad publicity, Sarah Palin’s tax problem even turned up in on the front page of Perez Hilton’s top-rated gossip site. Perez Hilton crooned about Sarah Palin’s tax problems when he expressed: “Our little Presidential Wannabe (2012 y’all!) owes up to $18,000 in daily allowances, which, in the eyes of the Tax Man (he cometh!), count as income… The per diem payments are intended to cover meals and incidental expenses while traveling on state business… The honeymoon is over, Sarah! Time to pony up!”

In relation to the mainstream press, Sarah Palin’s tax problems were shoved under the rug at the end of the campaign. Although they briefly raised their ugly head again when she resigned as governor of Alaska, it was a mere blip in the press radar. With the new hoopla surrounding her memoir, Sarah Palin has appeared on multiple major news outlets, ranging from Oprah Winfrey to Rush Limbaugh. In typical fashion, the media has not brought up the old tax problems that have yet to be resolved. Even if the mainstream American press has pushed Sarah Palin’s tax problems under the rug, the international press is till paying attention. In the Business Day section of the Sydney Morning Herald at the end of the summer, an article noted the following: “Sarah Palin owed income taxes on nearly $17,000 paid to her as travel reimbursements when she spent nights in her own home, according to a state legal opinion.”

In the end, the lesson learned from Sarah Palin’s tax problems is the essential importance of media figures and cultural icons to have the very best in tax resolution guidance and feedback. If Peter Stephan and the Tax Resolution Institute had been in Sarah Palin’s court from the beginning, her tax crisis would never have been allowed to become a character issue. How can the American public support a potential future Presidential candidate who has a history of dodging their taxes? Going rogue in terms of the McCain campaign may have been acceptable and even politically astute, but going rogue when it came to paying income taxes was simply irresponsible for an American citizen in Sarah Palin’s position. After all, our politicians are expected to set an example for the people in terms of integrity, honesty and straight shooting. If the truth be told and a valuable lesson learned, no American should ever go rogue when it comes to the IRS.

Peter Y. Stephan

About Peter Y. Stephan

Peter Y. Stephan, executive director of the Tax Resolution Institute, has been helping people resolve large, complex payroll tax problems and personal income tax problems for over 25 years. Peter has written a book "The Ultimate Tax Resolution Guide" and speaks on Tax Resolution topics frequently.

The Tax Knockout of Floyd Mayweather Jr — Why Didn’t He Come to Peter Stephan for Help?

After winning his return to the boxing ring with Juan Manuel Marquez, Floyd Mayweather Jr. was knocked-out by the IRS when they levied his purse for $5 million dollars. With a federal lien filed against him by the IRS for $6.2 million dollars in back taxes placed in 2008, Floyd Mayweather Jr. had no choice but to turn over a majority of his big money purse. Could Floyd Mayweather have settled for a much lower amount? Could the flamboyant boxer have avoided all the negative publicity and the probing questions from reporters? The answer to both these questions is a definite yes if Floyd had contacted Peter Stephan and the Tax Experts at the Tax Resolution Institute before his tax problem got so out of hand.

Floyd Mayweather: Talent & Tax Problems...
Floyd Mayweather:
Talent & Tax Problems…

After he narrowly defeated Oscar de la Hoya and knocked-out Ricky Hatton in 2007, Floyd Mayweather Jr. became the King of the Boxing World, considered the top pound-for-pound fighter in the sport. But then Floyd vanished into an early retirement, leaving boxing and the spotlight he loves behind. After the dynamic Filipino boxer Manny Pacquiao forced Oscar de la Hoya to quit on his stool and literally ended Ricky Hatton’s career with a crushing second round knockout, he became the new pound-for-pound king in the eyes of the media and the fans. Realizing he had been supplanted by Pacquiao and in great financial distress, Floyd Mayweather Jr. was forced to return to the ring once again.

Why was a boxing superstar like Floyd Mayweather, who makes millions of dollars every time he steps into the ring, in financial distress? Being a privileged sporting idol, Floyd Mayweather failed to pay the taxes due on the multi-million dollar paydays for his super fights and his subsequent income from countless endorsements. Spending wildly with a huge entourage, Floyd ignored the fundamental basics necessary for every wealthy star — sound business and financial management. As a result, when Floyd made his comeback, the press plagued him with questions about his tax problems. Floyd Mayweather Jr. tried to deflect the issue by stating:

“Same thing I always say — If I had a problem with the IRS, they would come take my house. They would come take my cars. They haven’t taken anything from me. Everybody knows this. If the IRS has a problem, they’re going to take it from you. They’re going to go just like this — ‘I need that.’ They’re going to put a padlock on it and take it from you. There’s no negotiating, they’re going to take it from you. I have two houses out here. My other house is a $3 million, $4 million house, whatever number they want to say. So they could take it and get their money.”

In truth, the IRS had placed a sizeable tax lien against the boxer and was in preparations to levy his purse. If Floyd Mayweather had been well advised, he could have come to Peter Stephan and the Tax Experts at the Tax Resolution Institute long before his tax problems blew up into a full-blown tax crisis. Floyd could have avoided the public relations nightmare and saved a massive amount of money if he had taken this step to achieve real tax relief.

In the past, Peter Stephan has settled similar tax bills like Floyd’s huge tax debt for pennies on the dollars. In fact, Peter is well known for being able to obtain extremely successful Offers in Compromise for his clients with the IRS. If you want direct evidence, look at the incredible resolution of the tax case of Dennis Kane (not his real name — Peter Stephan always respects and protects the privacy of his clients) in the Success Stories section on the Tax Resolution Institute website.

Entitled “An Entrepreneur’s Freedom To Live His Life”, Dennis Kane’s true account begins with a ringing endorsement of Peter Stephan and the Tax Resolution Institute. Dennis Kane clearly stated: “Peter Stephan and the Tax Resolution Institute achieved more for less in a shorter period of time than I thought possible. Peter was always reachable and responsive while never being condescending, judgmental or aloof. When everyone else who promised to help me failed to come through, Peter gave me the freedom to live my life without the weight of an albatross over my back.”

Dennis Kane’s home already had been seized and he still owed over four million dollars to the IRS when he came to the Tax Resolution Institute for help. Peter Stephan was able to settle Dennis Kane’s back tax debt with an Offer in Compromise for a mere five thousand dollars that was accepted by the IRS. Protecting his privacy and thus his professional reputation, Peter Stephan provided Dennis Kane with the freedom to become a successful American entrepreneur once again.

If Floyd Mayweather Jr. had come to Peter Stephan, he could have avoided the whirlwind of bad publicity and settled his back tax debt for pennies on the dollar. It is all too easy to forget that the IRS is the biggest collection agency in the world and they do not care if you are a big celebrity or an anonymous Joe Blow. If you do not pay your taxes, they will come after you. Whether you are Floyd Mayweather Jr. or another decent American citizen with tax problems, Peter Stephan can help you not just with treatment, but a proper diagnosis of your tax problem and the right solution.

After having his fight purse decimated by the IRS, Floyd Mayweather Jr. better hope that Manny Pacquiao defeats Miguel Cotto when they fight this coming weekend for the undisputed World Welterweight Championship. A win by Pacquiao will set up a super fight between the two pound-for-pound kings in boxing, settling the question of who is the best once and for all. In addition, both Manny Pacquiao and Floyd Mayweather Jr. will make a veritable fortune from such a blockbuster battle. Hopefully, Floyd will make sure he pays his income taxes this time around. If he does not, he surely will need the experienced help of Peter Stephan and the Tax Experts at the Tax Resolution Institute. If Peter Stephan could have helped Floyd Mayweather Jr. with his massive tax debt, he certainly can help you with your tax problem.

Update: Manny Pacquiao TKO’d Miguel Cotto in Round 12 of their World Welterwight Championship fight. Floyd Mayweather has a huge potential payday coming to him if he battles Manny Pacquiao in what would be the super fight of the 21st Century. If he fails to pay his taxes when such a huge payday comes around, he better contact Peter Stephan for help.

Peter Y. Stephan

About Peter Y. Stephan

Peter Y. Stephan, executive director of the Tax Resolution Institute, has been helping people resolve large, complex payroll tax problems and personal income tax problems for over 25 years. Peter has written a book "The Ultimate Tax Resolution Guide" and speaks on Tax Resolution topics frequently.