FINRA Penalizes Advisors Who Fail To Disclose IRS Tax Liens

Now that the IRS and state taxing authorities no longer report tax liens to the credit agencies, advisors may believe that they’re off the hook. But just because tax debt is no longer an obstacle to obtaining lending or improving your credit score, you’re not absolved from your requirement to disclose the event in a timely fashion. In fact, many argue that it’s critical to be forthcoming about events like these that aren’t exactly easy for your broker-dealer to discover independently.

“Willful” or “Non-Willful”?

The consequences for not disclosing such an event could be far more severe than ever, especially if FINRA discovers a willful omission. Constructive or implied notice means that, as a reasonable person, you should know that something is bound to happen, based on making an inference from facts that are known to you. In the tax lien context, specifically, “willful” is an incredibly low bar. If you know that you owe taxes, then you should also know that you could be subject to a tax lien. So just because you haven’t seen the actual lien notice in your mailbox, it doesn’t mean that you can argue that you didn’t know that a lien was going to be filed. 

What does it mean if you have a tax lien?

If you aren’t sure, burying your head in the sand won’t help. AdvisorLaw can help you identify whether you are required to disclose your unsatisfied tax debt, strategize ways to minimize the damage from a tax lien that has already been filed, and potentially even avoid the lien filing in the first place. 

Wednesday, May 12th, 2021


Contact us for a free consultation about our Tax Lien Resolution and Disclosure Expungement Services. AdvisorLaw’s services were created exclusively for financial advisors.

Samantha DePrima, J.D., LL.M
Director of Lien Resolution
(720) 419-2171