Aug 14, 2009

"Hammer Time" for MC Hammer....

Let me attempt to guess on “Stanley Burrell’s” plight with the IRS….

Normally the IRS can only collect for 10 years from the date of assessment…however, Mr. Burrell or “MC” still has what the IRS states “a claim against his assets” in the form of a tax lien.

Here is what I think happened and how the government could win:

1. MC’s taxes were from “15 years ago” but the IRS collection statutes may still be effective- they still could be within the 10 year IRS collection statute of limitations if he:
a. Filed bankruptcy- he indicated he did file in the past- this would extend his collection statute and/or
b. Filed late or was audited- if MC filed late taxes or was audited and the assessment was later
2. Bankruptcy may not have helped him abate his tax liability- i.e. he did not get any taxes discharged in bankruptcy- this would be the case if the taxes were recently assessed before bankruptcy or they were of the nature that cannot be discharged, i.e. payroll taxes
3. His recent success may have caused the IRS to “reduce his lien to a judgment”- the 10 year collection statute can be extended by the IRS if, at the end of the 10 years, the IRS wants to sue MC for his liability and obtain a judgment to collect- this would make him collectible to the Federal Government for the judgment amount

Without checking the County Courthouse records for MC, this tax lien would not have been a recent filing- however, a judgment may be something more recent. Given the timing, it appears likely that this is a judgment. In that case, the IRS and the Department of Justice take great efforts to ensure that the liability is true and correct and MC has his day in Court. Maybe he does not like the decision. In any event, as more facts emerge- so will the final outcome.

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Aug 9, 2009

Please do not plan to die in 2010 just to save estate taxes....

In 2010, there will be a short window for individuals to pass their estates tax-free to their decendents. The problem is it only lasts for 2010 and then Congress has the estate tax back on again. I do not know about you, but dying is not in my "tax planning" reportoire.

There is a great article that has been recently posted on the facts and myths about the estate tax. It is a good read to summarize the state of the estate tax.

Do me a favor, do not plan to use the estate tax provision in 2010. Death and taxes are inevitable, but doing the former to save the latter is not good for your health.

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