Florida Tax Attorney Blog

The IRS uses powerful methods to collect unpaid taxes. At the heart of the IRS collection procedures is the federal tax lien which arises automatically after the conditions precedent to the creation of the tax lien have been satisfied, i.e. - assessment of tax liability, demand for payment, and failure to pay.

Once these requirements have been met, the tax lien is automatically in place, under Internal Revenue Code (IRC) §6303(a), and enforceable against the taxpayer, according to IRC §6321. In essence, once a person fails or neglects to pay any federal tax after the IRS's demand, then the amount of the tax liability automatically becomes a lien in favor of the United States from the time of assessment.

IRC § 6321 also asserts that the lien automatically attaches to property and rights to property, whether real or personal. The tax lien attaches not only to all property and rights to property belonging to such person at the time during the period of the lien, but also to any property or rights to property acquired after the lien arises. For example, in Florida the bankruptcy court has held that the United States had a valid tax lien against the funds of a Chapter 7 debtor's bank accounts because the IRS had assessed the tax, the debtor had refused to pay the taxes, and therefore the tax lien existed against all properties, including the bank accounts which were opened after the lien arises. In re Morgan, 213 Bankr. 609 (Bankr. MD Fla. 1997).

A federal tax lien can be perfected by filing notice with states and any other creditors explaining that the IRS is first in line to receive payment as a result of back taxes. In addition, the tax lien is perfected against certain third parties if a Notice of Federal Tax Lien is recorded or filed. Florida state law controls where the federal tax lien must be filed to be effective and to give proper notice. IRC § 6323(f).

Continue reading "Discharge of IRS Tax Liens In Connection With A Florida Short Sale Part I" »

A corporation is a separate legal entity, with its own identity. Once funds are deposited into a corporate account, those funds become the property of the corporation. Decisions with regard to a corporation's property are made by the shareholders and carried out by the board of directors and officers of the corporation. Florida law requires that a corporation has a board of directors and that the board exercise all corporate powers. Any action of the board must be approved in a meeting and if no such meeting occurs, then by written unanimous consent of the board of directors. The board of directors has the authority to execute bylaws, which detail the methods through which these decisions and activities occur.

The directors of a corporation are fiduciaries who are entrusted with the activities of the corporation and are held to a high standard of conduct. Under Florida corporate law, a director must perform his or her corporate duties: (1) in good faith; (2) with such care as an ordinary prudent person in a like position would exercise under similar circumstances; and (3) in a manner the director reasonably believes to be in the best interests of the corporation. Courts have noted that Florida law has long recognized that corporate officers and directors owe duties of loyalty and a duty of care to the corporation. A director's fiduciary duties are extended to the creditors of a corporation when the corporation becomes insolvent or is in the vicinity of insolvency.

Fraudulent transfers in Florida are governed by statute:
A transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made if the transfer was made to an insider for an antecedent debt, the debtor was insolvent at the time, and the insider had reasonable cause to believe that the debtor was insolvent.

Generally speaking, if there is not enough corporate funds to pay all creditors, an "insider" of the corporation cannot get paid before outside creditors.

Continue reading "Fraudulent Transfers In Florida" »