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Craig D. Robins, Esq.

IRS Federal Tax Liens in Bankruptcy

Posted on Tuesday (October 27, 2009) at 7:30 am to Chapter 7 Bankruptcy
Tax and Bankruptcy Issues

Effect of Bankruptcy Filings on IRS Federal Tax LiensWritten by Craig D. Robins, Esq.
Last week I wrote about Eliminating Taxes in Bankruptcy .  Although you can often eliminate personal liability for old income tax debt, IRS tax liens can still remain attached to assets.
What is a Federal Tax Lien?
When there are substantial tax arrears, the IRS will prepare a document called a Federal Tax Lien and then file it with the county clerk’s office.  Doing so then results in the IRS obtaining a secured lien on any asset that the taxpayer may own in that county, whether it is real estate or personal property.
According to the Internal Revenue Service, three things must occur before a federal tax lien is issued: The IRS must assess the liability, send a Notice and Demand for Payment, and you must neglect to pay in full for 10 days after the notice was sent.
Can Federal Tax Liens Be Eliminated in a Personal Bankruptcy Filing?
Unfortunately, even though a debtor can bring a proceeding to discharge old tax income tax debt, this will not remove a federal tax lien.

Thus, you can prevent the IRS from going after you personally by filing for bankruptcy, but if they have a lien on your home, you will have to deal with that if you decide to sell or refinance the home.

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Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »


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