The bad press went viral last September – Turing Pharmaceuticals had increased the price of a drug called Daraprim by 5,000 percent. The drug, used to treat malaria and toxoplasmosis, had cost $13.50 before Turing bought it. After the acquisition, patients who often need to take it daily have had to pay $750 per pill.
Martin Shkreli, the CEO of Turing, resigned and the FBI arrested him for securities fraud. The Internal Revenue Service piled on by filing a tax lien for unpaid taxes along with penalties and interest of more than $4.6 million.
Damage to reputation and ruined credit
If the securities fraud charges were not enough the IRS tax lien on its own can damage a reputation, because liens are public. That is how Gawker was able to report on the tax troubles of the hated pharmaceutical CEO. In addition, tax liens can also spoil a solid credit rating and prevent real estate closings.
Waiting for payment
An IRS tax lien is different from a seizure, which is immediate and can leave you with a bank account balance of zero. A lien lasts 10 years and guarantees the Service is eventually paid.
The IRS follows this basic process before filing a Notice of Federal Tax Lien:
- It uncovers understated income or some other error that results in a tax liability
- Then it mails a letter titled a Notice and Demand for Payment
- It only files a tax lien when there is no payment within 10 days.
To get the agency to release the lien you generally must pay the tax liability. After the IRS receives a payment, it can still take up to 30 days to release the lien.
As with most tax issues, waiting only makes matters worse. At first notice of a tax liability, speak with a tax attorney about your options.
Source: Forbes.com, “Martin Shkreli Hit With $4.6M IRS Tax Lien On Top Of SEC Charges,” Robert Wood, Feb. 13, 2016
