How to Deal With Collections Issues for High Net Worth Clients

So high net worth clients present several challenges. From dealing with things from an IRS perspective, the first challenge that you’re going to have is that high net worth clients don’t fall within the IRS’ unusual guidelines for ordinary and necessary expenses. So take for example San Diego. For a single person living in San Diego, the local housing and utilities standard is about $2,500 a month, so the IRS allows you $2,500 a month as a single person for your housing and utilities. I always play a fun exercise to see where you can get housing for a single one-bedroom apartment for $2,500 a month in San Diego including your utilities and the reality of the situation is you can go to Oceanside which is 45 minutes north of here or you can go to Tijuana which is 45 minutes south. And those are about the only places where you’re going to find $2,500 a month rate including housing and utilities but for high net worth clients this presents a big problem because number one you’re dealing with income levels that are way above the IRS as ordinary standards so the fact of the matter is you may have somebody with an $8,000 mortgage or $10,000 mortgage or $25,000. Just because

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What Is a Tax Lien?

A Tax lien is a security interest that the government has in any real or personal property that the taxpayer owns. So what does that mean? In reality if you owe an obligation to the IRS or to the state, then a lien is the government’s way of protecting its interest in case you were to liquidate any property. So let’s take a house because that is the example that we run into most commonly for taxes. If you own a house and if the house has equity and the government puts a lien against it then when you go to sell that house the government is going to take its share of what you owe before you get any proceeds. So a lien is just simply protecting the government’s interest saying “hey we’re the IRS, we’re the state of California, we have a right to the equity in this property prior to it being sold.” So what a lien does those two things: number one it protects the government’s interest and number two liens are a matter of public record so when a lien shows up, it has the tendency to either damage the taxpayer’s credit or it could be discoverable.

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