Investigating Assets Prior to Submission of Collection Remedies

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When a client seeks a collection remedy because full payment is not an option, knowing the assets and liabilities of that client becomes important in the negotiations that will take place with the IRS.  Some clients have very simple asset situations that require little effort while others provide much more complex situations.  After having the IRS point out to my clinic two or three times that we filed an offer in compromise that left off a taxpayer’s assets, some of which were real property assets, we became much more diligent about searching records independent of the information provided by the client where we had any concerns about the correctness of the information coming from the taxpayer.  In each of the cases in which the IRS found assets left off of an OIC, we were able to provide an explanation but still, who wants to be in that position. 

Today, we hear from guest blogger Nicholas Xanthopoulos who directs the tax clinic at Nevada Legal Services in Las Vegas.  Just because Nick is from Las Vegas does not mean his clients have more issues reporting assets than representatives from other parts of the country but he has gone to the trouble of putting together some tips on how to find information about a taxpayer’s assets without using the database services that charge for this information.  These tips can be useful to anyone unable to use the paid database services that collect this information.  He expresses thanks to Frank Agostino for his “Google it” suggestions and to Caroline Tso Chen for her edits.  Keith

Low Income Taxpayer Clinic (“LITC”) practitioners have limited time and money.  From intake to representation, our work requires us to know as much as we can about our clients’ financial lives.  For instance, we need to know all we can about every asset someone has when preparing an offer in compromise based on doubt as to collectability (“OIC-DATC”).  Who wants an OIC-DATC examiner asking about a home that taxpayer didn’t tell us about?  (Client forgot to mention that she/he received property in a divorce but never recorded a quitclaim deed.)

The Service “contracts with various subscription search services” to help it locate taxpayers’ assets.  IRM 5.1.18.2.2(2).  Its private “locator service programs” include LexisNexis Accurint and Digital Matrix Systems’ Smart.Alx.  IRM 5.1.18.2(1).  The Service also uses Department of Motor Vehicles (“DMV”) databases, real property title reports, Uniform Commercial Code (“UCC”) filings, and Secretary of State (“SOS”) corporate information.  This section of the IRMprovides a roadmap of the sources that the IRS uses in tracking down taxpayer’s assets.  The offer examiners and others in the Collection Division will use these resources.  As the taxpayer’s representative you need to be prepared by finding ways to gather the same type of information before you make a submission to the IRS about your client’s assets and get embarrassed, or worse, by having the IRS locate assets of the taxpayer that were left off of the Form 433.

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Luckily for LITC practitioners, we don’t have to buy Cadillac subscriptions to LexisNexis or WestLaw to investigate our clients’ financial situations.  There may be no such thing as a free lunch, but there are free online tools to aid the search.  I’ll list some of my favorites with two caveats: first, we live in a big country, so what’s free in one place might not be in another; and second, there are great free resources that I don’t know about or forgot to mention here.

 

Google it:  Because it’s obvious, using an internet search engine can be easily forgotten.  Search for the taxpayer’s name, address, and phone number.  Also search for the name of everyone who lives at their address.  Pay attention to the domain name since that can influence how reliable the information is: federal government websites generally end in “.gov”, state government websites usually end in “[state].us” (as in “nv.us”), and nonprofit websites frequently end in “.org”.  Don’t know who the registered owner is?  Check out https://whois.icann.org/en.  (As an example and to quench your curiosity, www.optimataxrelief.com is registered to Harry Langenberg in France.)

Real property records:  Some places call it a recorder’s office; others call it a registry of deeds.  I call it an information treasure trove.  Many counties have a website that allows free searches for deeds, mortgages, notices of federal tax liens, and recorded court judgments.  If you’re lucky, the results will include not just a document description but also a free, scanned copy.

Assessor’s office:  Most municipal/county assessor websites allow users to search by address or owner.  In addition, they usually list a house’s assessed value.  If you prefer a private company’s estimate of a home’s value, you can visit www.zillow.com/sellerlanding/pricingtool.

SOS corporate information:  Virtually every SOS has a website where you can search business names for free, sometimes by an individual’s name.  The access might only include information summaries and filing names.  Some, like Florida’s, allow you to download free copies of filings.

Free credit reports:  Once every 12 months, a person can get a free credit report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion).  To request the report, visit www.annualcreditreport.com.  While credit reports are about debts, debts are often secured by assets.  In addition to defending a person from collection action, the credit reports can help prove a person is eligible to exclude cancelled debt from their income due to insolvency.

Court records:  Free online access to trial level state court case information varies widely.  In some places, like Maine, it isn’t available.  In others, such as Minnesota and Nevada, online docket information may be accessible for free.  For federal Article III courts, Public Access to Court Electronic Records (“PACER”) charges to view both docket activity and documents.

UCC filings:  To quote Wayne Gretzky, “You miss 100% of the shots you don’t take.”  Before writing this article, I’d given up on free access to UCC filings.  However, Arizona provides free access (http://apps.azsos.gov/apps/ucc/search/), so I wouldn’t be surprised if other states do too.

 

 

Comments

  1. Carl Smith says:

    For those in New York City, since about 2003, the on-line ACRIS system run by the City’s Department of Finance can be used for free. Google “ACRIS” to get the URL. If you put in a name on ACRIS, you can get all deeds, mortgages, federal tax lien filings, and UCC filings — one stop shopping. I often used ACRIS during clinic intakes to find out the years for which the taxpayer had filed federal tax liens — something they often could not definitively say or did not even know about.

  2. Bob Kamman says:

    Has anyone asked the subscription services if they would provide free access to a consortium of low-income legal clinics, for a limited number of searches? If nothing else, a digest of the refusal messages would make an interesting blog post.

  3. Should address privacy law issues that block much of these sources in many states. California is one.

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