Is it true that my income taxes can't be discharged in chapter 7 if there has been a "Tax Lien" issued? They would be otherwise

Asked about 3 years ago - Riverside, CA

Basically, my old tax debt appears to meet the hurdles for dischargeability. However, I read that all that goes out the window if there is a tax lien. Is that true? How would I find out if there is in fact a tax lien? Does it matter whether or not I have a home?

Additional information

Okay thanks. I guess what I am getting at is if all or some of the monies have a tax lien, would it no longer be worth seeking the discharge.

Also, is it true that if an amendment were filed or negotiations took place later (say in 2008 or 2009 for example), that would delay some of the timelines for discharge eligibility?

Attorney answers (3)

  1. Michael John Primus

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    Contributor Level 13

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    Answered . Taxes can be discharged in bankruptcy if various requirements are met. A lienholder is someone who can take your property if you do not pay (like a car payment) and the filing of a tax lien puts the IRS in the position on lienholder as to all assets including retirement. This sounds daunting...and it is. Generally the IRS uses tax liens to stick their claim to real estate and retirement accounts. One thing to remember is that federal tax liens expire after 10 years and the date of expiration will show on the lien recorded with the county. Usually they are not very aggressive about their lien rights after bankruptcy and the liens just expire.

    Law Office of Michael J. Primus We are a debt relief agency and help people file for bankruptcy under the... more
  2. Lysbeth Goodman

    Pro

    Contributor Level 14

    Answered . The tax lien will remain against whatever property, real or personal, you own, and these liens survive claims of exemption so that the IRS can seize property that no other creditor could take (social security maybe too). The recorder's office in your county offices should be able to tell you if there is such a lien recorded/filed against you/your property. You would best get a copy of the lien and a copy of the claim they filed in the bankruptcy case, because the lien is not always placed for all years of taxes. Thus, 2007 could have a tax owed but no lien for that year or amount of tax, so those taxes would be discharged.

    Lysbeth Goodman is an attorney licensed in the state and federal courts of California. This answer is for general... more
  3. Dorothy G Bunce

    Pro

    Contributor Level 20

    Answered . The taxes could be discharged, but the lien remains as a secured debt against any property you own, and that INCLUDES EXEMPT PROPERTY such as an IRA, 401K, real estate, vehicle, etc.

    Tax liens are recorded with the county recorder and you can search for them there. It doesn't matter if you own a home or not, the tax lien is efffective against any and everything you own.

    Hope this perspective helps!

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