This is what I like most about Jaime Pressly—she spells her first name the same way that I do. While not a huge fan of “My Name is Earl” (why does everyone think that Jason Lee is so funny?), I feel that my sister in unique spelling understands the hardship I endured as a child in never being able to find a pencil set or souvenir keychain with an accurate monogram.
I could do a whole series on Jaime’s legal woes during the past month. First, there was a DUI, then some tax trouble, and, most recently, a divorce. However, I’m going to take this opportunity to apply some of my mad skills as a CPA to my celebrity stalking. Per the reputable sources that I use for this column, Ms. Pressly owes over $600,000 in unpaid federal and state taxes. On September 8, 2010, the IRS filed a $281,699 lien against Pressly with the Los Angeles County Recorder of Deeds and then a second lien of $260,370 on December 6. Prior to that, in June, the state of California filed a lien of $95,080 against the starlet.
Eeek—a tax lien! That sounds pretty bad. Wait a minute. What is that, exactly? And how did things escalate to this level?
Ah, the Internal Revenue Service: Shrouded in myth, cloaked in secrecy. It uses its mystique to strike fear in the hearts of the populace. After all, we whisper to one another, it was the IRS that brought down Al Capone. It doesn’t help that the Internal Revenue Code, U.S.C. §§26 et seq., is a maze of more than 9,000 sections written in some pretty impressive legalese. Lucky for the taxpayer, the IRS has also issued tens of thousands of additional regulations, revenue rulings, revenue procedures, private letter rulings, and technical advice memorandums to help explain things a bit better (not that I’m personally complaining. After all, I’m banking on this complexity to keep me gainfully employed and put my hypothetical children through prep school).
But before you descend into a 1040-induced panic attack, I’m going to let you in on a little secret —the IRS really isn’t that scary. They’re not going to freeze your assets or send in a SWAT team to arrest you for tax evasion should you accidentally forget to report some babysitting income. In fact, if the IRS determines that you might owe a bit more money, it will usually begin the discussion with a polite letter to request the additional funds.
Apparently though, Ms. Pressly did not seek the competent legal counsel of a George Washington Law School graduate and instead ignored these notices.
Well, that unwise move gave the IRS cause to invoke § 6321, which states that if any person liable to pay any tax neglects or refuses to pay it after demand (that would be the letter she received), the amount and any interest, penalties, and other costs that may accrue in addition to the base amount shall be a lien in favor of the United States upon all property and property rights belonging to such person. Per § 6322, the lien will continue until the tax liability assessed is satisfied.
As a brief review of property law, a lien is a method by which a lender can secure, restrict the use of, or encumber property if debts owed are not paid. A tax lien refers to the government’s right to attach a financial obligation to a person’s property when taxes owed are not paid. By filing notice of a lien, creditors are publicly notified that the IRS has a claim against all property, including property that the taxpayer acquires after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate. It may also affect the taxpayer’s credit score. So, it’s kind of a big deal. Especially if you own a multimillion dollar home in the Hollywood Hills. I assume that Jaime is going to be pretty busy fighting that DUI and arranging for divorce proceedings, but April 15 will be here before you know it. And since she’s already in enough trouble with the IRS, maybe this is the year to use $29.95 of those syndication payments and spring for Turbo Tax.