State Laws
Can I give my property to my cousin?

It is tempting to giving your property to a relative or friend rather than have the internal revenue service - IRS take it. But it might not work.

If the internal revenue service - IRS has filed a lien, then any real property transferred will still be subject to the lien.

Even if the IRS has not filed a lien, they can still get at the property through either "transferee liability" or "fraudulent transfer" doctrines. "Transferee liability" can occur when you give your property away or sell it to someone else for less than its true value. A "fraudulent transfer" occurs whenever you transfer property to someone else to prevent the IRS from taking it. In either case the result is the same. The IRS can either seize or sell the property to satisfy your tax debt.

The other problem is a practical one. What happens if you give property to your cousin - and he won't give it back when you want it?

Should I pay the IRS before I pay my other creditors?

Yes, usually. For a lot of reasons, you do not want to have the internal revenue service as a creditor, and the sooner you can get them out of your hair the better. They have powers of collection that other creditors might not have and they can be very tenacious when they decide to go after you. If you have the resources to pay the tax debt in full, this is often the best option.

Even if you don't have the cash to pay them, it might be possible to borrow the money just to get rid of them. You will be left with a debt to someone else, but that is often better then having a debt with the IRS. To put it another way, to whom would you rather owe $20,000: your brother or the IRS?

Full payment is not always possible or the best option. Before deciding to pay the tax debt, review the other options (such as paying in installments). If you have questions about the internal revenue services, you should consult with them directly.

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