Al Pacino is famous for playing movie criminals such as Michael Corleone in "The Godfather" series and Tony Montana in "Scarface." But in real life, the Oscar winner is quick to get back in the good graces of tax enforcers.
After being slapped this spring with a $31,706.04 tax lien by the state of California, reportedly for unpaid Golden State taxes from 2009 and 2011, Pacino promptly paid off the tax debt.
California officially released the lien July 31, according to the celebrity website TMZ.
The state tax issue was not Pacino's first run-in with tax collectors.
In 2011, the Internal Revenue Service filed a lien against Pacino for $188,283.50 in connection with unpaid taxes in 2008 and 2009. In this case, the tax issues were related to a Ponzi scheme in which several Hollywood stars were caught.
Tax lien entanglements
Even if you have good reasons for not paying a tax bill, the bottom line is that the nonpayment is likely to lead to a lien.
The result is more than just embarrassment from having your tax situation revealed in public records.
The lien will show up on your credit report, making it at best difficult and at worst impossible for you to get a loan for a car or house.
Many employers also check credit reports when making hiring decisions.
And your property is tied up until the tax agency releases its claim.
Avoiding tax liens
The best way to avoid this embarrassing and costly situation is to pay the tax you owe on time.
It that's not possible, contact the tax office. This lets the agency know you're not avoiding the bill and in many cases, the tax collector will work with you. IRS options include installment payment plans and offers in compromise that allow you to settle your tax bill for less than is due.
Also remember, the IRS does make mistakes. If it files a lien by mistake, you need to file an administrative claim with the IRS to have the lien removed.
Regardless of whether the lien was in error or you neglected to pay your tax bill, once the debt is paid off and the IRS releases the lien, get a copy of that official action. Then send it to all the credit bureaus so your files can be updated and you can say "goodbye" to that unwelcome little tax friend.
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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and a co-author of the e-book "Future Millionaires' Guidebook."