Lil Wayne's Tax Lien: 5 Lessons for Consumers
Lil Wayne is facing a tax lien to the tune of $12 million, stemming from years of unpaid taxes.
Weezy allegedly failed to pay taxes for 2011 and 2012. For 2011 he owes a staggering $5.8 million. And for the following year, it's even worse -- more than $6.3 million, TMZ reports.
So what exactly is a tax lien? Here's the answer, along with a few other lessons we can learn from Lil Wayne's tax lien:
- What is a federal tax lien? A federal tax lien is the government's legal claim against your property when you neglect or fail to pay a tax debt. Uncle Sam placed a federal tax lien on Lil Wayne's property because he failed to pay his taxes for 2011 and 2012. The lien protects the government's interest in all your property, including real estate, personal property and financial assets.
- When is a federal tax lien imposed? A federal tax lien is imposed after the IRS assesses your liability and sends you a bill that explains how much you owe (called a Notice and Demand for Payment) -- and then you neglect or refuse to fully pay the debt in time.
- How do you get rid of a tax lien? The most effective way to eliminate a tax lien is by paying off the debt. Chances are, Lil Wayne will get rid of his federal tax lien by paying off the tax debt in full. Lil Wayne probably won't have too hard of a time paying off his obligations, considering he's worth an estimated $135 million, according to TMZ.
- What if you can't pay the lien off all at once? The IRS offers payment plans for those who can't pay the debt off all at once. If for whatever reason Weezy is unable to pay his balance in full, the IRS may be able to offer an individual payment plan based on monthly installments.
- How do you avoid a tax lien? Unlike Lil Wayne, you can avoid a federal tax lien by simply filing and paying all your taxes in full and on time. If Weezy can't file or pay on time -- or even hire an accountant to do it for him -- then he should at least think twice about ignoring the letters or correspondence he gets from the IRS.
As Lil Wayne says, "You got money and you know it. Take it out your pocket and show it and throw it." Lil Wayne, you mean throw it in the general direction of the IRS, right?
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