A 63-year-old man and his long-time partner recently moved out of the house they owned and occupied since 1994. The couple’s story includes a pair of debt-clearing bankruptcies, an unshakable tax lien and the long-reaching power of the IRS.
Tax problems haunted the man since the early 1980s when he moved his ill sister and three nephews into a home nearby. The man failed to pay his federal taxes for two years and financial difficulties eventually forced the man to resort to bankruptcy.
By 1993, a bankruptcy judge absolved all his debts, which the man believed included money that he owed the Internal Revenue Service. Around the same time, the man met his current partner, and the couple decided to buy a home. A year after they moved in, the IRS notified them of a $2 million tax lien against the property. The man thought his debt had been erased, only to find out that the IRS could still place a lien on his home.
The couple scraped together more than $100,000 to pay off as much of the tax debt as they could afford. The IRS took the money, held onto it for a year and returned the uncashed check to the couple. An attorney advised the homeowner to file again for bankruptcy. A second bankruptcy judge cleared the owed debts, but the IRS refused to take the tax lien off the couple’s property.
The IRS seized funds from the man’s bank account. His employer was required to pay the his bills directly. The IRS contacted friends, business contacts and family members to question them about the man’s finances and damaged the investor’s reputation. By 2009, the couple had managed to pay off their mortgage. The IRS took the opportunity to foreclose.
In one last attempt to keep his home, the man hired a lawyer who found discrepancies in an IRS audit from the 1980s. The legal effort fell short in district court, in which a judge ruled last spring that the home should be sold for back taxes.
This story is a clear example of just how complicated and confusing the tax process can be. There are many rules and laws associated with the IRS that the average person isn’t aware of. Unfortunately, this can cause discrepancies in a tax filing, sending the IRS to come knocking. In situations like this, it can be helpful to speak with someone experienced in tax law.
Source: St. Petersburg Times, “Decades-old dispute with IRS costs Clearwater Beach couple their home,” Leonora LaPeter Anton, Oct. 9, 2011