Celebrity Federal Tax Lien: NeNe Leakes

The “Real Housewives of Atlanta” cast member NeNe Leakes, whose real name is Linnethia Monique Leakes, recently had a Federal Tax Lien filed against her in the amount of $824,366.01 in unpaid taxes for the 2014 tax year.

As the Federal Tax Lien is of public record, this gives us the opportunity to review some facts about tax lien.

Date of Assessment.

According to the FTL above, the Date of Assessment was November 23, 2015.  This means on that date she either filed her 2014 tax return, or was assessed an additional amount upon further examination of her tax return by the IRS.  The Date of Assessment is the date which starts the Collection Statute for IRS collection – the IRS has 10 years from the later date of when the return was filed or there was a later assessment on the given return, to collect on that liability.

Late Filing Penalty.

NeNe may have filed her return late, given the Date of Assessment, which means that she may be subject to penalties for late filing.  The IRS has listed 8 facts about Penalties which may apply in NeNe’s case:

1. Two penalties may apply.  If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.
2. Penalty for late filing.  The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.
   Minimum late filing penalty.  If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.
3. Penalty for late payment.  The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.
4. Combined penalty per month.  If the failure-to-file penalty and the failure-to-pay penalty both apply in any month, the maximum amount charged for those two penalties that month is 5 percent.
5. File even if you can’t pay.  In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. Use IRS Direct Pay to pay your tax directly from your checking or savings account. You should try other options to pay, such as getting a loan or paying by debit or credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.
6. Late payment penalty may not apply.  If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.
7. No penalty if reasonable cause.  You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time. There is also penalty relief available for repayment of excess advance payments of the premium tax credit for 2014.

Unpaid Balance of Assessment. 

The FTL for NeNe indicates that there is an unpaid balance of $824,366.01.  This does not necessarily mean this was the amount due on her tax return; this is simply the balance between tax owed and what she had paid when the return was filed.  Thus said, her current balance could now be far in excess of the unpaid balance of assessment.  Referencing the notes above, she could also have failure to file penalties and failure to pay penalties which can accrue to 25% each.