Friday, February 6, 2009
Her income has dropped precipitously, her expenses haven’t, and she has little savings or other hard assets besides a house in a Chicago suburb that Zillow.com figures is now worth only $280,000.
Nevertheless, the IRS says Taylor must pay $400,000 in back taxes, penalties and interest. Otherwise, she faces the possibility the G-men will grab most of her income, including royalties and Social Security, and maybe even her home. The feds rejected her offer to take out a reverse mortgage on that house and pay $200,000 plus up to 50% of any future net revenue, moves that would allow her to remain in her residence and live out her remaining time with her second husband.
The Tax Court yesterday held that the IRS did not abuse its discretion in refusing to accept her proposed offers in compromise, upheld the IRS's tax lien and levy against her, and upheld the IRS's refusal to abate tax penalties. Taylor v. Commissioner, T.C. Memo. 2009-27 (Feb. 5, 2009). In its conclusion, the Tax Court appeared to take a swipe at Tom Daschle, Tim Geithner, Nancy Killefer, and Hilda Solis:
Both petitioner and respondent repeatedly commented on petitioner's stature as a beloved and well-known professional singer as support for their respective positions in these consolidated cases. We disagree with both parties insofar as they contend that a taxpayer's celebrity status is somehow relevant to what this Court must do in deciding whether the Commissioner's collection action may proceed. Every taxpayer, no matter how famous or notorious, has a legal obligation to honestly report and pay his or her income tax liability each year and is entitled to fair enforcement of Federal tax laws. ... Respondent gave petitioner ample opportunity to rectify her failure to pay estimated tax when due and considered petitioner's collection alternatives in accordance with applicable administrative and legal requirements.