My Federal Tax debt was discharged in bankruptcy in 2009. Yes, I was one of the rare instances that Tax Debt could be discharged. I just recently learned about the IRS's Fresh Start Lien Withdrawal policy. I currently meet the 3 following requirements:
1. I am current and have been current on my tax obligations in the past 3 years;
2. My liens were released in 2009 once BK was discharged (not paid, and not sure if considered "satisfied" but definitely discharged and released);
3. I am current on my 2013 withholding amounts.
Since I meet the 3 criteria above, will the IRS grant me a lien withdrawal (removal of public record as if it never happened) under the Fresh Start program even though the debt was discharged and not technically paid?
Real Estate Attorney
Study the "fresh start" criteria carefully and if you feel you qualify, then ask the IRS and make sure you have all your documents needed to show you qualify.
In addition to real estate law in the State of Hawaii, I also practice federal bankruptcy law. If my answers relate to a bankruptcy question, the following statement applies. "As a debt relief agency, we also help people file for bankruptcy relief under the Bankruptcy Code, including federally supervised repayment plans under Chapter 11, Chapter 12 (farmers and fishers) and Chapter 13."
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The withdrawal process of the Liens do not apply to taxes and liens discharged in bankruptcy.
The above is not legal advice. It is an illustration of options that can be used in certain situations. I have not examined all of your facts, if I did I might provide a different response.
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You may not satisfy the eligibility requirement of the Fresh Start Program that the underlying tax liability has been "satisfied," as the IRS released its tax lien only because of the bankruptcy discharge, which rendered the liability "legally unenforceable." Legal unenforceability is an alternative basis requiring the IRS to release a filed tax lien. IRC Sec. 6325(a)(1). Nevertheless, you have nothing to lose (except your time and effort) in seeking to obtain a withdrawal of the lien notice. Good luck!
The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is licensed to practiced law ONLY in the State of California. Answers to questions from users in other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state to address their specific tax issue.
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