How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ed Johnson Your Own Question
Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Type Your Tax Question Here...
Ed Johnson is online now
A new question is answered every 9 seconds

We were audited for 2005. The audit resulted in a 25,000 assessment,

Customer Question

We were audited for 2005. The audit resulted in a 25,000 assessment, plus an additional 9,500 in penalties and interest. Assessment was 12/03/07. Our income has dropped dramatically (2008) and we are currently under "temporary uncollectible" status. We are under water in our house and have no idea when we could ever pay this back tax, let alone our other debts. I just received "Notice of Federal Tax Lien" for the assessment balance-4/21/09. My attorney has advised us to file bankruptcy - - my question is, by filing bankruptcy (chapter 7) would this discharge the tax assessment and release the lien? Also, is this a preview of what's to come (our bank account, business receivables, etc.?) Maybe important to know, we did not deliberately mislead on tax return, our CPA firm made error, we filed a claim on E&O, received penalties and interest settlement - 1/3 to attorney, 2/3 to IRS.
Submitted: 7 years ago.
Category: Tax
Expert:  Ed Johnson replied 7 years ago.

Dear SydVin,


IN general chapter 7 bankruptsy can discharge irs taxes under the following conditions.


You can discharge (wipe out) debts for federal income taxes in Chapter 7 bankruptcy only if all of the following conditions are true:

  • The taxes are income taxes. Taxes other than income, such as payroll taxes or fraud penalties, can never be eliminated in bankruptcy.
  • You did not commit fraud or willful evasion. If you filed a fraudulent tax return or otherwise willfully attempted to evade paying taxes, such as using a false Social Security number on your tax return, bankruptcy can't help.
  • The debt is at least three years old. To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.
  • You filed a tax return. You must have filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy.
  • You pass the "240-day rule." The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. (This time limit may be extended if the IRS suspended collection activity because of an offer in compromise or a previous bankruptcy filing.)

You can not discharge a Federal Tax Lien.


So while your personal obligation to pay the tax may be eliminated, if hte lien is already recorded, it remains on the record. So even though the IRS can not pursue you for it, it remains on the record, until it is paid.


So when and if you sell the property on which the lien is attached recorded, the tax lien is paid first.


Since you already have an attorney, I assume he is a tax attorney. Please ask him about the following form:


You are entitled to a due process or equivalent hearing.

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Ed Johnson and 3 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
My Tax Attorney responded by saying " I thought there was already a lien" If that were true, why would he recommend bankruptcy if it doesn't discharge the debt, officially, or release the lien?? Also, should this lien have been filed since we were finally granted the "currently uncollectable" status?? Will they next file Levy??
Expert:  Ed Johnson replied 7 years ago.

If there was already a lien you could still file for the hearing, even though it is intended to be filed for before the lien. BUT, if after the lien you would request an equivalent hearing.


If it is collectible the IRS can periodically review the condition and it can be moved, though this does not happen often, to a collectible status.


They may next file for levy.


The lien can be filed even though the debt is considered at the moment in collectible status. You or your attorney should have been provided a notice of collectible status that also should have stated that a lien may be filed;


If form 53 was not included, then the lien will not be suppressed.


However you can file the following for requesting the lien be withdrawn:


I can not say if they will move to levy. That is a decision made by the person having control of your case.





JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Previous | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA

Meet The Experts:

  • Wallstreet Esq.

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
< Last | Next >
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
  • Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • Richard's Avatar


    Tax Attorney

    Satisfied Customers:

    29 years of experience as a tax, real estate, and business attorney.
  • Robin D.'s Avatar

    Robin D.

    Senior Tax Advisor 4

    Satisfied Customers:

    15years with H & R Block. Divisional leader, Instructor
  • Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
  • jgordosea's Avatar


    Enrolled Agent

    Satisfied Customers:

    I've prepared all types of taxes since 1987.
  • R. Klein, EA's Avatar

    R. Klein, EA

    Enrolled Agent

    Satisfied Customers:

    Over 20 Years experience