Pay Someone Else's Taxes

Did you know that you could make money by paying someone else's property taxes? Thirty-one states provide a little-known investment opportunity that might be perfect for you.

You could even see an annual interest return from 18% to 50%.

The returns are available through tax lien and tax deed certificates sold by the county. Tax liens are placed on a property when the real estate taxes are late. Many local governments auction the liens off to investors once or twice a year as a way to get their owed money. These are called tax sales.

For example, if Mr. Jones owes $2,000 in real estate taxes and hasn't paid it, the county will place a lien on his property. Eventually the lien will be auctioned to an investor. The investor may get the lien for $2,000. The county gets the money it needs right then. The treasury or finance department will start going after the money from the delinquent tax payer. They send nasty little notes, warning them of future actions. They charge penalties and interest rates of up to 50%. The local government can then turn around and pay the investor a large return.

You can find these investment opportunities through your local treasury or finance department. There are also many websites that keep the information in an up-to-date compilation. You may have to pay for the information. The best way is to contact your local department instead of paying for a national service.

These are short-term investment opportunities. After the lien has been auctioned off, the county lets the owner know that they might lose their property to the lien certificate holder if they don't pay the taxes, interest and penalties. This gives the owner another chance to pay the bill and keep the property. If they don't pay, the lien certificate holder can foreclose on the property.

In some areas, the government will forego the investment opportunity and outright sell the tax deed to the property. This means if they don't pay the taxes, you are the owner of the property straight out.

There are many stories about making a lot of money buying tax deeds. A man in Oklahoma is rumored to have bought land for $17 at a tax sale only to sell it for $4,400.

Some people have been lucky, but there are risks and hazards with tax certificates. The property could be trashed, you could lose your money if you don't follow the proper procedures, the title could be clouded, and the former owners might be irate and armed with ammunition.

Due to the auction property, a nice property might only be available with some not-so-nice terms attached. You might "win" the property only to then be responsible for all the unpaid taxes and mortgages. If you have to foreclose, you may have a lot of costs come up. The owner might be able to invoke the "equity of redemption" right that allows him or her to re-acquire the property after a foreclosure.

Make sure that you know all of the risks before you jump into tax sales. Research the properties, which are usually listed in the local newspaper a few weeks before the sale. Have a thorough understanding of your potential obligations, know what the rules are, speak with your attorney and realize that your best plans may not work out.

Ninety-eight percent of impacted property owners will pay their taxes. Most of the investors into these certificates make money on the interest paid on the tax bill.

Death And Taxes

“In this world nothing can be said to be certain, except death and taxes”
Benjamin Franklin

I, like many other good citizens from this great country of ours, left it to the very last moment to mail off this year’s tax return. As I entered the local post office and saw the long line, I once again promised myself that next year would be different. I really would make the effort to get them off before the last minute rush.

As I moved slowly towards the front of the line, I began wondering, in this day and age is this really the best system our great and wonderful leaders can come up with. After all, we now live in a world that allows a satellite miles above us to read a number plate. We can get the worldwide web on our cell phone, download TV programs that we may have missed or just want to save onto our iPods.

The original tax laws introduced in 1913 were a very simple affair. They began with tax brackets ranging from 1 to 7 percent - a far cry from today’s levels. The IRS tax codes, regulations and guidelines now have well over 9 million words. No wonder there's so much confusion. Is there truly anyone who really understands this monster. Let’s put this into some form of prospective. The Declaration of Independence has a little more than 1300 words. The Constitution which has served us well for more than 200 years comes in around 5000 words and the Holy Bible makes do with less than 800,000 words.

The Office of Management & Budget estimated in 2004 that we as a nation spent over $200 billion on compliance cost. At a time when the nations manufacturing industries, the foundation of any good economy, are all struggling against cheaper imports, shouldn’t our leaders be using that money to create “Jobs” for their citizens. Most experts agree that $200 billion would create well over 3 million jobs, which of course creates sales of consumable goods which creates more jobs and sales taxes.

From the moment we wake up in the morning we are being hit by taxes. Everyone is at it -- turn on the light (electricity taxes), run the shower (utility taxes) and my personal favorite the telephone taxes, all 6 million of them, or that's what it seems to me every time I receive a telephone bill.

Has the time come for a simple Flat Rate Tax, something we can ALL understand. There are many countries all over the world who have used this simple to understand and cost effective way of collecting taxes to revitalize their economies. Let's just imagine for a moment what it would be like if we could complete our tax returns on one simple piece of paper. A Flat Rate Tax for individuals and a Flat Rate Tax for businesses.  The same rules apply to all regardless of size of income. We all pay the same rate. Most of the successful countries have levied Flat Rate Taxes of less than 17%, with a stating level that protects the lower income groups. Could life ever be that simple again?  Would our Leaders really want us to understand what they were up to? And then there's those lobbyist.