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You more than likely know that April 15th is the last day to pay any amounts you owe in state taxes for 2013 to avoid accumulating penalties and interest. However, did you know that the California State Board of Equalization (BOE) can place a lien on all of your real property, including property you acquire after the lien has been recorded if you do not pay the entire amount owed in full or apply for a payment plan by April 15th?[1]
“A lien is a legal claim to your property used as security or payment for your tax debt” and may arise when the tax becomes due and is unpaid, generally the day after your tax return is due, or on the date of actual assessment, for instance after an audit.[2] A state tax lien will be valid for 10 years following the date it is filed and the BOE can renew the lien twice if the amount due on the lien remains unpaid.[3] The BOE typically will not levy (aka seize and sell) your primary residence but they will “enforce the lien on your residence if you sell or refinance your home.”[4] The BOE may levy your personal property, such as a boat, wages, licenses, and bank account as payment for any amounts owed.[5] The levying of wages is restricted to a maximum of 25% of your after tax income per paycheck. In addition, a state tax lien will likely negatively affect your credit rating and thus your ability to receive a loan to purchase a house or car or sign a lease.[6]
If you cannot pay your state taxes in their entirety, we can help you make an offer in compromise to avoid being subject to a state tax lien. An offer in compromise, if accepted, will satisfy your liabilities with the BOE for less than the full amount owed. Not everyone qualifies though, and certain conditions must be met before the BOE will consider the offer. I can help ensure you a much stronger chance of success by making sure you make an acceptable offer at the outset and educating you on the terms of the program before you incur any legal fees in pursuing this option. The Tax Law Offices of David W. Klasing only wishes to provide this service where you are in a good position to benefit from the service. If you qualify for the program, can comply with the ongoing terms of it, and the minimum acceptable offer is less than the total, tax penalties, and interest that you would owe, an offer in compromise may be a viable and potentially lucrative option for you!
