Holland, MI asked in Tax Law for Michigan

Q: What happens to someone with a huge ($333k) federal tax lein?

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3 Lawyer Answers
Mr. Ayuban Antonio Tomas CPA, Esq.
Mr. Ayuban Antonio Tomas CPA, Esq.
Answered
  • Tax Law Lawyer
  • Coral Gables, FL

A: The tax lien will attach to any real property that the person attempts to sell. Federal tax liens are not dischargeable in bankruptcy. If you have a tax lien, you should consult with a tax attorney to review your different options which would include an offer in compromise or an installment agreement.

A: While the lien may not be easily removed in bankruptcy, my understanding is underlying tax obligation is dischargeable to some extent. The effect is that fax authority can benefit from the sale of the real estate but not pursue some part of future income or future assets acquired after bankruptcy.

Judi Smith
Judi Smith
Answered
  • Tax Law Lawyer
  • Peoria, AZ

A: It all depends on how much you have in assets. There are options to get a lein released. You could pursue an offer in compromise. A Federal Tax lien MAY be dischargeable in bankruptcy depending on the type of taxes at issue. While I am generally in favor of people helping themselves, a lien is one of those circumstances where best bet is to quickly contact a tax attorney that can help you deal with the lien before the IRS moves to levy.

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