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If a second person who has tax problems is on my savings and

checking accounts and on my...
If a second person who has tax problems is on my savings and checking accounts and on my home deed (not on the mortgage), can IRS and State tax authorities asses my accounts or place a lien on my home?
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Answered in 6 minutes by:
11/4/2012
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,704
Experience: Taxes, Immigration, Labor Relations
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LEV :

Hi and welcome to Just Answer!
If there are two co-owners - and only owe owner has a tax debt - the tax lien may be placed on the whole property.
Similarly for the bank account with with two co-owners - the IRS and State tax authorities may levy on the bank account even if only one person has a tax debt.

Customer:

The scond person is on the deed to the property but not on the mortgage documentation.

LEV :

The lien - if registered - it is against the property. The mortgage has priority over other levies. So if you sell the home - the mortgage is paid first - and then - other levies.

Customer:

So as long as the home is not sold there would be no collection until the home is sold.

LEV :

In most situations - the IRS doesn't not pursue foreclosure - but the tax lien - if places - will stay with the property until resolved.
You will not be able to refinance or sell the property without paying the tax lien.

Customer:

roger that - that is what I thought. However on the two banks accounts my girl friend of 18 years is co-owner and they could attach those accounts. I had taken her off my major account. I put her back on after I thought she got her tax situation taken care of. I will take her off again right away. She just got notifications for not paying 2008 and 2009 taxes. Do they have any recourse against me when they find that I removed her prior to any that may be directed toward her?.

LEV :

See section 5.11.2.1.1 of the Internal Revenue Manual - http://www.irs.gov/irm/part5/irm_05-011-002.html
5.11.2.1.1 (05-05-1998) General


Serve a levy only when there is reason to believe the third party is holding the taxpayer's property.


If the taxpayer owns property with a person not liable for the tax, consider using another source.


Any property in which the taxpayer has an interest is subject to levy, even if the property is jointly owned with another person (e.g., community property, jointly owned bank accounts). However, because wrongful levy suits and claims can result from such levies, consider levying on another available source.


 

LEV :
So - as we see - the IRS has the authority to levy a joint checking account. However, if you have other accounts that are in the name of debtor only will be levied first.
LEV :

If the debtor's name is XXXXX XXXXX the account - the IRS may not levy on such account.

LEV :

If you personally are not liable for the tax debt - you may not be held responsible for your girlfriend debts.

Customer:

Thanks - I'm not to concerned with a lien on the home. Almost paid for and I,m 70. So I will be here till I die. She can deal with it then. However, she has no other assets and only a small checking account. So I will remove her from my major account. I am not liable for the tax debt but it appears they could attach my major saving account.

LEV :

That is correct - as long as she is listed as a co-owner on that saving account.
If these are your money - it would be better to remove her from that account.

Customer:

Lev - thanks, XXXXX XXXXX have told me confirms what I had thought was the case. I think I will contact a local Tax attorney and see if they can help her. I also have a small mad money account that I have been putting money in. Most of that is funds she started giving me so she has money to take care of 2012 taxes. She is self employed and gets a 1099 every year.

LEV :

You need to be clear - if these are your money or her money?
If these are your money - you simply hold them in your only account - and funds will be saved from the levy.
If these are her money - that you are hiding in your only account - you might be involved into the tax fraud to hide funds from taxing authorities. That situation most likely you want to avoid. So be prepared to discuss all issues with the attorney whom you plan to contact.

Customer:

Roger that - thanks. Not hiding it at all, just putting it in my account to make sure she has funds to pay 2012 taxes. It is her money. It is a different account that my major one. Thanks again.

LEV :

You are welcome.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,704
Experience: Taxes, Immigration, Labor Relations
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