Can the IRS take away your judgment if the company you sue owe money in unpaid taxes?

[Spaceoverlord]

Utah state.

There is a company that owes me a lot of money but the owner told me that its not worth suing him because even if I win, he said he has tons of unpaid taxes with the IRS and when I win my judgment, the IRS will step and take my judgment money away to pay his unpaid taxes.

I think he is just desperate to avoid the lawsuit and would say anything to make me go away however I don't know for sure. Can the IRS take someone's judgment money away if the money being sued also happens to owe the IRS money?

I have heard that if a person has a lein on property and the IRS also has a lein on that same property. The IRS will be ahead of you in line when the property sells however I don't know if they can take away your settlement money can they?

Thanks

 

[Zigner]

If he doesn't have money to pay his taxes, why do you think he has money to pay you?

 

[Spaceoverlord]

If he doesn't have money to pay his taxes, why do you think he has money to pay you?

Who said he does not have the money to pay his taxes? He choose not to pay his taxes on purpose and now he is in trouble. Also, what he owes me is very small compared to what he said he owes the IRS. So the answer the question asked, can the IRS interfere with a judgment payment or not?

 

[FlyingRon]

As you "heard," the IRS is always senior to everything else when it comes to getting paid. They're not taking your judgement, but if the guy owes the IRS, you're going to have a harder time collecting the judgement unless he has a lot of assets. They'll be ahead of you in line.

 

[LdiJ]

Utah state.

There is a company that owes me a lot of money but the owner told me that its not worth suing him because even if I win, he said he has tons of unpaid taxes with the IRS and when I win my judgment, the IRS will step and take my judgment money away to pay his unpaid taxes.

I think he is just desperate to avoid the lawsuit and would say anything to make me go away however I don't know for sure. Can the IRS take someone's judgment money away if the money being sued also happens to owe the IRS money?

I have heard that if a person has a lein on property and the IRS also has a lein on that same property. The IRS will be ahead of you in line when the property sells however I don't know if they can take away your settlement money can they?

Thanks

He IS explaining things poorly, but the bottom line is that the IRS and some other things would have priority over any cash or assets belonging to the company. If you were to get a judgment against the company you would have higher priority than many other creditors, but not higher priority than the IRS or payroll etc.

There wouldn't be some special "judgment money" set aside for you. Its all in one pot and each creditor would get their share in a liquidation or bankruptcy, based on how much is there and who has priority. The IRS absolutely would have priority over you.

 

[Spaceoverlord]

As you "heard," the IRS is always senior to everything else when it comes to getting paid. They're not taking your judgement, but if the guy owes the IRS, you're going to have a harder time collecting the judgment unless he has a lot of assets. They'll be ahead of you in line.

The owner of the company is a millionaire and has the attitude of the " rules don't apply to me" type of guy. I will be naming him personally in my lawsuit and he has more than enough money to pay both the IRS and me. However, he is claiming that he will call the IRS and they will come in and take my judgment away or intercept the judgment money for the unpaid tax, then go away and leave him alone.

I told him that he is bringing down the roof on his head if he plays that game.

 

[FlyingRon]

He's full of poop. The IRS has no claim on your judgement. Even if the IRS took all his funds, the judgment persists against any he might have int he future.

 

[Spaceoverlord]

He IS explaining things poorly, but the bottom line is that the IRS and some other things would have priority over any cash or assets belonging to the company. If you were to get a judgment against the company you would have higher priority than many other creditors, but not higher priority than the IRS or payroll etc.

There wouldn't be some special "judgment money" set aside for you. Its all in one pot and each creditor would get their share in a liquidation or bankruptcy, based on how much is there and who has priority. The IRS absolutely would have priority over you.

I am asking if the IRS can intercept the settlement or judgment check that he is forced to write me? The owner of the company is very wealthy and this company is like a hobby for him. He has more than enough money to pay both the IRS and whatever I might win in a lawsuit.

However he is telling me the IRS will take my judgment money away then leave him alone. This is not a situation with a liquidation and liens both placed on the same property.

 

[HRZ]

He is trying to blow you off, bottom line unless you file a suit and win you will not even be in the line to get paid. The IRS may or may not be in line with recorded liens....you may be able to check for recorded liens at the county courthouse .

IF you have a claim against both him and his firm, file against both . Sometimes folks just manage to pay of small claims because they are afraid that your acts may place their bigger house of cards at risk. Sometimes you must be the loudest squeaky wheel ..to get noticed and paid ..

 

[Taxing Matters]

As you "heard," the IRS is always senior to everything else when it comes to getting paid.

No, the IRS is not ALWAYS senior to everything. Instead, the general rule for all federal tax liens except the estate tax lien is that once the IRS has filed a notice of its lien the IRS stands line behind all those who had perfected their liens ahead of the IRS and behind those who perfected their liens after the IRS filed its notice of lien. There are some complications in the federal tax lien law that would change the priority in certain specific situations, but in most cases federal tax law follows the same basic rule as states use for judgements: the first to perfect their lien gets priority.

 

[Taxing Matters]

I am asking if the IRS can intercept the settlement or judgment check that he is forced to write me?

No, the IRS cannot do that. What the IRS can do is put a levy on the bank account of the person/entity that owes the taxes. If the IRS serves a levy and attaches the funds before you cash the check then there may not be any funds to pay the check when you try to cash it. On the other hand, if you successfully cash the check, the IRS will lose out and have to look to other assets of the taxpayer to collect. He's blowing smoke trying to get you to back off. If he won't pay voluntarily, sue him and then garnish/levy the account yourself based on your judgment. When it comes to attachment of bank accounts, the rule is that the creditor who serves the levy/garnishment order first wins.