For most, the prospect of having any interaction with the Internal Revenue Service beyond filing a tax return and either paying in or receiving a refund is frightening. Being slapped with a tax lien is tantamount to the approach of the end of the world. Of course these two things are not on the same plane and in some cases a tax may be the result of a simple oversight or miscommunication and be easily addressed. Late last month Oscar winner Robert DeNiro found himself in this situation.
The actor, who is believed to be worth more than $200,000 found himself facing a $6.4 million tax lien. The lien was filed after the actor failed to pay that amount which was owed in connection with his 2013 tax return. Generally liens follow multiple notices of payment due. Before a Notice of Federal Tax Lien can be filed by the IRS, it must first assess the liability, send a Notice and Demand for Payment and fail to receive payment within 10 days.
When the IRS files such a lien, it covers all of the tax payer’s property and essentially establishes that the IRS has priority when the tax payer sells real estate or files for bankruptcy. It is designed to make sure that at some point the IRS will get the money it is owed. Unless action is not taken by the tax payer, the lien will remain in place for 10 years.
The failure of DeNiro to pay the money owed to the IRS was apparently inadvertent. He said did not receive the notices being sent by the IRS because they were sent to the wrong address. Illustrating how easily the matter can be cleared up, upon learning about the outstanding bill, he simply paid it, presumably along with any interest and penalties owed.
Not every taxpayer who is facing a tax lien will be able to clear up the matter as easily as DeNiro did. Because of this it can be beneficial to work with a tax lawyer.