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Man Loses Home After Failing To Pay $8.41 In Property Taxes

$8.41. That was how much 83-year-old Uri Rafaeli, a retired engineer, in Michigan underpaid his property taxes by in 2014. That was all it took for him to lose his house.

Rafaeli bought a 1,500-square-foot Southfield home in 2011. He paid $60,000 for the property, and the deed was recorded by the Oakland County Register of Deeds on January 6, 2012. He put additional money into the home, too, as he intended to use the rental income from the property to fund his retirement.

Rafaeli believed that he was paying his property taxes on time and in full, but in 2012, he received notice that he had underpaid his 2011 tax bill by $496. He paid up in 2013 but made a mistake figuring the interest (interest also accrued while his check was in the mail): He was short by $8.41.

In response, Oakland County seized his property and put it up for sale. The home netted just $24,500 at auction; according to Zillow, the property is now estimated to be worth nearly $130,000.

The County kept the overage from the auction: $24,215 in profits, or 8,496% of the actual tax, penalties, and interest due (the debt had grown to $285 with penalties, interest, and fees).

It was all legal.

Under Act 123 of 1999, Michigan allows its county treasurers a great deal of authority to handle unpaid taxes, including rushing the tax foreclosure process. Under the Act, the property is considered delinquent if taxes aren’t paid in the previous year. If the outstanding taxes, fees and penalties remain unpaid after two years, the County can foreclose on the property; that’s much more quickly than before, when the average timeframe to move a foreclosure was five to seven years. Shortly after foreclosure, the former owner loses the right to buy back the property, and the County becomes the owner. At sale, the funds belong to the County. There’s no requirement to refund any of the proceeds to the owner even if the overage far exceeds the amount owed.

Rafaeli—and his lawyers—think that’s wrong. They took the matter to the U.S. District Court for the Eastern District of Michigan. The court found that Rafaeli—and a similarly situated plaintiff—suffered “a manifest injustice that should find redress under the law” but dismissed the claim for lack of jurisdiction.

Rafaeli tried again. He didn’t argue that he didn’t owe tax, penalties, interest and fees. But he did object to the County taking the excess. The County argued that Rafaeli had no rights to the equity because the General Property Tax Act does not expressly protect it. And that’s the reason that Rafaeli keeps losing: The courts have sympathy for his plight but have found that the law does not prevent the County from keeping it.

He’s not alone. Tens of thousands of properties in Detroit have been subject to the same kind of treatment. Many of those who owe taxes understand that they have a debt, but they don’t necessarily understand how to navigate the process or what the failure to pay on time can mean. As with Rafaeli, even something as simple as miscalculating the interest due, can have serious consequences.

Today, Rafaeli is represented by the Pacific Legal Foundation (PLF). PLF was founded in 1973 by members of then-governor Ronald Reagan’s staff as the first public interest law firm dedicated to the principles of individual rights and limited government. PLF is taking the case to the Michigan Supreme Court, arguing that keeping the funds is an unjust taking. If he wins, Rafaeli—and other landowners in similar situations—may be entitled to compensation.

According to PLF, the entire process, as it is happening now, is nothing more than government-sanctioned theft. “Predatory government foreclosure particularly threatens the elderly, sick, and people in economic distress,” PLF argued on its website. “It could happen to your grandparents. It could happen to you.”

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Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

Source: Man Loses Home After Failing To Pay $8.41 In Property Taxes

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A short video explaining your property taxes and the role of the Assessor’s Office.

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IRS Will Offer Free Help For Those Struggling With Withholding Taxes

Businessman opening envelope with paycheck

If the changes to tax rates and withholding over the past year have you scratching your head, help is on the way. The Internal Revenue Service (IRS) is offering a free online information session on how to do a Paycheck Checkup.

Here’s why many taxpayers are confused. The Tax Cuts and Jobs Act (TCJA) introduced many changes beginning in 2018, including caps on state and local tax deductions, a zeroed-out personal exemption amount, and the elimination of reimbursed job expenses. Additionally, new withholding tables were not available to employers until mid-January 2018, and some employees didn’t see a switch in withholding until mid-February 2018.

(You can find out more about updating your form W-4 here.)

The combination of new rules, new withholding tables, and even new tax forms meant that many taxpayers didn’t withhold properly. In January of 2019, the IRS advised that they will waive underpayment penalties so long as withholding and estimated tax payments total at least 85% of the tax shown on the return for the 2018 taxable year. Just a few days ago, the IRS expanded the relief to those whose withholding and estimated tax payments total at least 80% of the tax shown on the return for the 2018 tax year.

To avoid the same kinds of problems next year, the IRS is encouraging taxpayers to plan ahead. By plugging your current tax data into the withholding calculator on the IRS website, you can do a paycheck checkup and avoid any nasty surprises at year end. You should consider a checkup even if you did one in 2018: another review can help make sure you’re withholding the right amount for 2019.

The IRS webinar will walk you through how to use the online IRS Withholding Calculator (you can find out more about the withholding calculator here). Folks who might need a checkup include those taxpayers who had a large tax refund or tax bill for 2018 when they filed their tax return this year, or had a major life change (like a wedding, birth of a child or bought a house) in 2019. Other taxpayers who might need a checkup include two-income families or those taxpayers who have two or more jobs at the same time, or those who claimed refundable tax credits like the Child Tax Credit or Earned Income Tax Credit.

The seminar, scheduled for Thursday, March 28, 2019, will be offered twice: once in English (at 2 p.m. Eastern) and once in Spanish (at 11 a.m. Eastern). There will also be a special Q&A session. To register for the English version, click here. Para inscribirse en la versión en español, haga clic aquí. Closed captioning will also be available.

Want more taxgirl goodness? Pick your poison: follow me on twitter, hang out on Facebook and Google, play on Pinterest or check out my YouTube channel. 

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anythin…

Source: IRS Will Offer Free Help For Those Struggling With Withholding Taxes

2019 Tax Refund Chart Can Help You Guess When You’ll Receive Your Money


If anyone tells you that they have the 2019 tax filing season all figured, they’re lying. By all accounts, the upcoming tax season is going to be tricky. Despite a shoestring staff due to the shutdownnew tax forms and new tax rules, the 2019 tax season is still set to open on January 28, 2019. The Internal Revenue Service (IRS) claims that the season will operate as close to normal as possible—including issuing tax refunds. So when are those tax refunds coming……….
Source: https://www.forbes.com/sites/kellyphillipserb/2019/01/21/2019-tax-refund-chart-can-help-you-guess-when-youll-receive-your-money/#6522e9684ba2

IRS Announces Tax Season Start Date Despite Government Shutdown

The Internal Revenue Service (IRS) has announced that tax season will open on Monday, January 28, 2019. The IRS will begin accepting paper and electronic tax returns that day. The IRS made the start date announcement despite the ongoing government shutdown. “We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” said IRS Commissioner Chuck Rettig………

Source: IRS Announces Tax Season Start Date Despite Government Shutdown

Patagonia’s Billionaire Founder To Give Away The Millions His Company Saved From Trump’s Tax Cuts To Save The Planet – Angel Au-Yeung

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Yvon Chouinard, billionaire founder of outdoor apparel firm Patagonia, has traditionally shied away from politics. But things have changed for the rock-climbing, fly-fishing outdoorsman since Donald Trump moved into the Oval Office. On Wednesday, Patagonia announced it has an additional $10 million in profits on its books for 2018 as a result of Trump’s “irresponsible tax cut” last year, which lowered the corporate tax rate from 35% to 21%. Instead of investing the additional dollars back into its business, Patagonia said it would give $10 million to grassroot groups fighting climate change, including organizations that work in regenerative organic agriculture to help reverse global warming.

 

 

 

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