The King of R&B and the musician behind “Trapped in a Closet” owes nearly $5 million in back taxes to the IRS. This is not his first time in financial or legal trouble – his Chicago mansions went into foreclosure last year because J.P. Morgan Chase claimed he had over $2.9 million overdue on his payments. According to the IRS, R. Kelly has owed taxes on his income since 2005:
2005 – $1,472,366.77
2006 – $ 710,520.51
2007 – $ 376,180.11
2008 – $1,122,694.90
2009 – $ 173,815.18
2010 – $ 992,495.24
Kelly has been attempting to pay back his taxes, however he dug himself a large hole that will be difficult to climb out of. He paid $2.6 million in back taxes in 2008 and $1 million in 2011 but still has almost $5 million left. The primary IRS statute of limitations is 3 years, however the IRS limitations on collections is 10 years.
The IRS automatically has a lien and files a Notice of Federal Tax Lien with creditors. IRS tax liens cover all of an individual’s property plus anything acquired after the lien has been filed. Tax liens last 10 years and they will be automatically released unless the IRS re-files them. In order to release the lien, the individual must pay the tax, interest and penalties or post a bond guaranteeing payment. The IRS could take up to 30 days to approve or deny a bond.
In the rare circumstance where the IRS knowingly or negligently fails to send an individual a Notice of Federal Tax Lien, the individual may sue the federal government for damages. Do not rely on this.
For every tax letter or notice received, it is important to take it seriously and find proper representation if necessary. With expert advice and defense, an individual’s tax debt may decrease drastically. R. Kelly has a long road of debt payments and IRS letters ahead of him and he should seek legal and financial help immediately.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.