TACS FACTS ● VOLUME XI ISSUE 2 ● Page 1 TACS FACTSSM Volume XI, Issue 2 Spring 2016 A Resource for Treasurers on Developments and Trends in Collection and Bankruptcy and Other Areas From Taxing Authority Consulting Services, P.C. (TACS) GENERAL DISTRICT COURT: Tips, Traps and Tricks By Andrew Neville, Taxing Authority Consulting Services, P.C. ------------------------------- When one thinks of going to court, images of stern, gavel-pounding judges and exclamations of “OBJECTION!” often come to mind. Fortunately, getting a judgment for delinquent taxes and other fees is much less dramatic and scary than Hollywood makes it seem. Filing a lawsuit against a delinquent taxpayer can be an extremely effective collection tool. First, you might wonder why it is even worth your time to learn and navigate the court process. You are right in thinking that Treasurers in Virginia have a plethora of other tools to use to get taxpayers to pay their share. The court process though is an additional, important tool that many Treasurers may not be using. A Treasurer can use the court process to preserve the statute of limitations, to get a taxpayer to provide much-delayed documentation regarding a move or disposition of a vehicle, etc. (thus, cleaning up your books), or just to show a taxpayer (and his or her friends) that you are serious about collecting delinquent taxes, especially those that are now out of state. Below are some tips and tricks for navigating the General District Court (“GDC”) process. 1. Know what qualifies - You can take accounts totaling up to $25,000 in tax, penalty, and interest to GDC (anything above that amount must go to Circuit Court). This limit does not include attorney fees or the costs of filing the suit or getting good service. - If the total TPI for an account is more than $25,000, you can break the various tax years up into separate cases. However, if you are going to do this, organization is key. Continued ► TACS FACTS is a publication of Taxing Authority Consulting Services, P.C. (TACS). You may register to receive this quarterly newsletter and other TACS alerts by subscribing at our website, www.taxva.com. Please also visit our website for more information about the firm, our newsletter archive and sample forms and letters. Please contact us at [email protected]or (804) 649-2445 if you need help registering or to gain access to the site. The articles and content of this publication may not be reprinted without the written permission of Taxing Authority Consulting Services, P.C. Copyright 2016
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TACS FACTS ● VOLUME XI ISSUE 2 ● Page 1
TACS FACTSSM
Volume XI, Issue 2 Spring 2016
A Resource for Treasurers on Developments and Trends in Collection and Bankruptcy and Other Areas From Taxing Authority Consulting Services, P.C. (TACS)
GENERAL DISTRICT COURT:
Tips, Traps and Tricks By Andrew Neville, Taxing Authority Consulting Services, P.C.
-------------------------------
When one thinks of going to court, images of stern, gavel-pounding
judges and exclamations of “OBJECTION!” often come to mind. Fortunately,
getting a judgment for delinquent taxes and other fees is much less dramatic and
scary than Hollywood makes it seem. Filing a lawsuit against a delinquent
taxpayer can be an extremely effective collection tool.
First, you might wonder why it is even worth your time to learn and
navigate the court process. You are right in thinking that Treasurers in Virginia
have a plethora of other tools to use to get taxpayers to pay their share. The court
process though is an additional, important tool that many Treasurers may not be
using. A Treasurer can use the court process to preserve the statute of
limitations, to get a taxpayer to provide much-delayed documentation regarding
a move or disposition of a vehicle, etc. (thus, cleaning up your books), or just to
show a taxpayer (and his or her friends) that you are serious about collecting
delinquent taxes, especially those that are now out of state. Below are some tips
and tricks for navigating the General District Court (“GDC”) process.
1. Know what qualifies
- You can take accounts totaling up to $25,000 in tax, penalty, and
interest to GDC (anything above that amount must go to Circuit
Court). This limit does not include attorney fees or the costs of filing
the suit or getting good service.
- If the total TPI for an account is more than $25,000, you can break the
various tax years up into separate cases. However, if you are going to
do this, organization is key. Continued ►
TACS FACTS is a publication of Taxing Authority Consulting Services, P.C. (TACS). You may register to receive this
quarterly newsletter and other TACS alerts by subscribing at our website, www.taxva.com. Please also visit our website for more information about the firm, our newsletter archive and sample forms and letters. Please contact us at [email protected] or (804) 649-2445 if you need help registering or to gain access to the site. The articles and
content of this publication may not be reprinted without the written permission of Taxing Authority Consulting Services, P.C. Copyright 2016
No government can exist without taxation . . . . This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.
— Frederick the Great
Answers to Some Frequently Asked Questions:
Q: We have delinquent business tangible taxes owed by an LLC. They changed the name of their LLC and put it
in an LLC under his brother's name.....but we know that the original owner is still the one running the business. I
know we can seize the tangible property, but are we allowed to place a bank lien on any account other than the
previous LLC's account? I know where the new LLC banks and also where the “former owner” banks personally, but
because the taxes are under the old LLC, I am not sure what I can do.
A: You might want to take a look at Code of Virginia §58.1-7. Under this section, if the new LLC received a
distribution from a business it knew owed taxes (and you can impute this due to the familiar relationship), you would be able to pursue the new business to the extent of that distribution. This would allow you to lien their bank account. Before taking action, you should send the new LLC a letter informing them of their liability and then move forward.
§ 58.1-7. Same; liability of recipient of improper corporate distribution.
If any corporation assessed with a tax, including penalties and interest thereon, distributes its assets without first
paying such assessment to the Commonwealth or to the proper political subdivision, as the case may be, any person
with actual notice of such assessment receiving any moneys or other property from such distribution shall be held
personally liable for such assessment to an amount not in excess of his participation in such distribution and any
purchaser with actual notice of any such assessment shall be liable therefor to the extent of the assets of the
corporation coming into his hands. Nothing in this section shall be construed so as to affect the rights of any bona
Q: We are getting ready to have our first vehicle auction of vehicles seized by the sheriff for delinquent taxes.
When there is a lien from a financial institution on the vehicle do the taxes or the lien holder get paid first?
A: If the taxes are owed on the vehicle that is seized they get paid prior to the lienholder pursuant to Code of Virginia §58.1-3942C. The only thing that would be paid ahead of the taxes would be the costs of the sale, if ther sare any. If the taxes are owed on other property than that which was seized (e.g. other vehicles); the lienholder gets paid before taxes can be applied on the other (not seized) property.
Q: A taxpayer filed Chapter 13 Bankruptcy on December 7, 2015. We had placed a DMV Stop on the taxpayer
for delinquent taxes/citations. The taxpayer did not list the City as a creditor in the bankruptcy. Are we required to remove the DMV Stop?
A: The automatic stay prevents any collection action against the debtor, which would include imposing a DMV stop. It doesn’t matter that you didn’t get notice of the bankruptcy as the automatic stay still applies. If the DMV hold is just sitting there, you are really not taking any collection action; however, should the person need to renew their tags while they are in bankruptcy, you would have to release the stop due to the bankruptcy
case. That release can be reported back to DMV as a bankruptcy release and no fee will be charged. ♦