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Ray
Ray, Lawyer
Category: Legal
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Experience:  29 years in civil, probate, real estate, elder law
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This question is for a legal opinion on a judgement vs and

Customer Question

This question is for a legal opinion on a judgement vs and IRS levy:
A default judgment was granted in California in 1993 against me although I was never served here in Texas of the suit.

The judgment was domesticated here in Texas in 1993 and a writ of execution was was issued on July 13, 1995 but returned nulla bona.

On October 1998 I filed for Chapter 11. The validity of the judgment was then heard in Federal Court, denied and discharged in March 2002. The Bankruptcy was dismissed in October 2003.

In January 2012, plaintiff files to revive the debt. The district court ruled against plaintiff and denied the debt revival. Plaintiff appealed and the appeals court reversed the ruling in plaintiff's favor.

We believe the appeal ruled in error and I will file in the Texas supreme court to try and overturn that ruling.

In the meantime, the IRS holds apprx an $800,000 levy, including interest & penalties against all of my assets, however I negotiated a special agreement subsequent to the BR dismissal with the IRS after they reviewed my assets and finding my assets were exempt from collection. They agreed to leave me alone and "check once in awhile" as to any significant change in conductibility. Ever since that agreement in about 2005, they have kept their word and have not pursued me.

I believe my assets remain exempt as in 2005 which I will review again with my local attorney.

My question is if the California plaintiff's judgment is upheld by the supreme court and agrees with the appeals court what is that plaintiff's effective date and does it hold an effective date of revival or is the effective date considered to be the date of domestication on 1993? I'm wondering who hold the debt priority -- the IRS or the California judgement?

Regards, Jack
Submitted: 1 year ago.
Category: Legal
Expert:  Ray replied 1 year ago.

Customer:

Thanks for your question and good afternoon.My sympathy here for your dilemma.

Customer:

The IRS here regardless of the outcome of the judgment is superior to any other creditor.The government always has priority here in Texas.

Customer :

No matter that the other judgement came first. Or does it at all no matter the date. Seems that is what you are saying.

Customer:

The effective date in your case may run from the date of the appeals court decision.I would hope that was addressed in the court's decision.

Customer :

Let me look quickly....

Customer:

You need to also know that in Texas there is automatic right to one appeal , the court of appeals, the Supreme Court is discretinary.

Customer:

What I am trying to point out is that chances they agree to hear it are numerically slim but you may be one of the lucky ones.

Customer:

You may also have the option to refile bankruptcy here if the prior one was dismissed.

Customer :

So, the judgement is now final, probably?

Customer :

The basis for the supreme court angle is that 2 laws by supreme courts are in conflict.

Customer:

Well again it is possible they will agree to hear it and maybe you prevail here.

Customer :

No those were appeals courts... my error.

Customer :

But back to the basic question. Does the IRS have priority over the other guy?

Customer:

Yes the IRS always has priority as far as liens and judgments.

Customer:

Here is reference that may help you with the appeal of the judgment.

Customer :

Well this is what had me worried:

Customer:

It has a lot of cases that you may need in your appeal here.

Customer :

The filing of a notice5 publicly announcing the existence of the federal tax lien is not required; the lien itself, sometimes called the "secret lien" exists as a matter of law, and can be perfected even without the filing of a notice. However, filing has significance in establishing the IRS's priority against other claimants to the taxpayer's property, such as a purchaser, the holder of a security interest or mechanic's lien, or a judgment creditor.6


6. IRC 6323(a).

Customer:

The IRS lien is the one that should really scare you long term.They can attach it to any property in your name and even garnish wages.

Customer:

The judgment here in Texas is way much harder to collect.You picked a great state to relocate too.It may be hot but way more debtor friendly.

Customer:

You would want to go cash only here, keeping minimal assets in the bank as well as property.All you can do is try to continue to look as poor on paper as you can.

Customer:

You can also appeal and see how that goes.

Customer :

Didn't relocate... family has been here since as a Republic in 1836

Customer:

Then you are used to the summers by now.But it is real hard for a debtor to collect such a judgment even if they prevail.And you can make it harder by keeping your account to a minimal amount.

Customer:

The creditor and IRS often use credit bureau to do asset search.

Customer:

When I worked for the state we did too to see if anyone had assets they had not reported.

Customer:

So overall keep your accounts low or in another name and social to look as poor as possible.

Customer :

Problem is I have a small Internet company in 217 countries and payments are made by CCards. However, the IRS reviewed that too and I guess thought it was of no value because it takes more effort from me to run it.

Customer :

BTW: I am 75 and just supporting myself with the little company and SS

Customer:

Keep as little as possible in any accounts in your name.Bank levy can be a real beast.You are notified after the fact and it can cause real problems if they clean out an account.As long as you know that you should be fine.

Customer:

I would definitely keep your social security checks in a separate account.

Customer :

Should I clean it daily, hourly, weekly, monthly...??

Customer:

That way it is black and white that this is what these funds are.And draw them out as soon as you can and keep balance down .

Customer :

Yes, I 2 accounts: 1 for the company and another for the SS

Customer :

So the IRS levy has them blocked.... that's what I had thought all along.

Customer:

Any funds in your name are at risk.There is no way to know until after the levy.I have done debt collection.Often we got lucky.I had a debtor that sent his son a graduation check, we levied his account, he got notice after the fact and lots of bounced checks.

Customer:

Yes the IRS would be ahead.

Customer:

Thanks for letting me help you today.Good luck on the appeal and surviving the summer.

Customer:

If you can leave a positive rating it is much appreciated.

Customer :

Okay... I think that's what I was looking for. But, my TX research was showing a predate was superior to the IRS later date. Thus, my need for help.

Customer:

You are welcome.I appreciate the chance to help you today.

Customer :

Thanks!

Customer:

Here is reference to your exemptions.

Customer:

I hope that you will be so kind as to leave a positive rating. If you do have any additional questions about my answer please click the "Continue Conversation Link" so I can provide you with a fully satisfactory answer. Please be aware that any rating of 1 or 2 is reflected as a negative rating and I receive no credit for my answers.


This communication does not establish an attorney-client relationship.Information provided here is not legal advice. Rather it is simply general information.

Customer:

I also am sending you the appellate rules for Texas, good luck here.

Customer:

Thanks again.

Customer :

Appreciate it!!

Customer:

No problem, the best to you.

Customer :

Where do I do the rating?

Customer:

It should come on now.

Ray, Lawyer
Category: Legal
Satisfied Customers: 30123
Experience: 29 years in civil, probate, real estate, elder law
Ray and 17 other Legal Specialists are ready to help you
Expert:  Ray replied 1 year ago.
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Customer: replied 1 year ago.

I still had this one question based on our discussion of the IRS having priority over other creditors regardless of the effective date preceding that of the IRS.


 


Your answer was:


---------------------------------------------


Customer:
Yes the IRS always has priority as far as liens and judgments.

---------------------------------------------


 


Can you give me a cite on that? My attorney probably knows but I meet with him tomorrow and want to be informed.


 


Thanks!


Jack


 

Expert:  Ray replied 1 year ago.

Thanks for letting me clarify here.The court may have to decide here if the judgment they entered in 2012 reinstating the judgment is prior to the IRS lien.It is not clear exactly what date is the start date here.If the judgment date predates the IRS lien then they may be ahead.

It was not clear to me that when they reinstated here what actual effective date was in play.The courts in some situations here have to decide priority and battle it out.So it does depend here on which was first.

In my mind here the IRS predated the reinstatement date and therefore would have priority.If there is dispute between the creditor and IRS a court would have to decide.It may come down to dates here and when the reinstatement occurred and whether the IRS lien predated it.If the IRS did then they always have priority.And if the reinstatement occurred after the IRS as I had understood your facts then they would have priority.

 

It's the reinstatement date here thats confusing, whether it was the earlier date or the date of reinstatement that controls.Ultimately the courts may have to go back over the facts and resolve it if there is a dispute.As you can see these things get complicated with the multiple dates as to when the effective date is on the judgment lien, the IRS date would be clear.

 

Again if there is dispute among the parties as there often is this matter might return to the courts for the IRS and creditor to fight it out.As long as the IRS was first here time wise then they are a superior lien.

 

Thanks for letting try to clarify this issue for you.I am so sorry if this was not clear before.Good luck here.



Here is reference..see the section on..

 

http://www.irs.gov/irm/part5/irm_05-017-002.html

5.17.2.6.2 (03-27-2012)
Judgment Lien Creditor

Customer: replied 1 year ago.

Thanks, Ray. That did have me confused because my earlier research did show the dates to be important in deciding priority.


 


This is now in accord with my understanding.


 


Jack

Expert:  Ray replied 1 year ago.
You are welcome and I appreciate the chance to follow up.Good luck to you.

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Ray
Ray
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29 years in civil, probate, real estate, elder law