Have a Tax Question? Ask a Tax Expert
I declared bankruptcy in 2003 and the assessment was back taxes owed from 2001 - 2003. The statue of limitations for collection should be running out sometime this year but on the Notice of Federal Tax Lien Filing, the IRS has listed the last day for them to refile the lien as 3/19/2023. That adds another 10 years to the 10 years that have already elapsed. The date of the assessment which was 2/17/2003. Could they have made a mistake or do I just not understand the statue of limitations and they can continue to try to collect this for another 10 years?
The CSED (collection Statute expiration date) , in a case under the Bankruptcy Code, is suspended while the Service is prohibited by reason of the case from collecting, and for six months thereafter. For more information see IRC 6503(h)(2). Thus, the CSED is generally suspended while the automatic stay imposed by the bankruptcy is in effect. Even if the suspension of the CSED under IRC 6503(h) no longer applies, the CSED still may be suspended when substantially all the debtor’s assets remain in the custody or control of the bankruptcy court under IRC 6503(b).
Recorded tax liens will survive the bankruptcy and continue to attach to the pre-petition property that you retain after bankruptcy. The Chapter 7 bankruptcy only discharges your personal obligation to pay the debt. The IRS is free after the bankruptcy to seize assets that are subject to a recorded tax lien, even if your personal liability has been discharged.
I am sorry that I am not able to provide you with a more favorable answer.
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My bankruptcy was filed and adjudicated over 10 years ago and this tax lien was just filed. Can they just continue to refile the lien over and over regardless of how long ago the tax was assessed?
Filing Chapter 7 triggers a statutory protection known as the automatic stay. The automatic stay bars creditors, including the IRS, from taking action to collect most types of debt except through the bankruptcy process.
Among other things, the automatic stay bars the IRS from filing a tax lien postbankruptcy. This means that the IRS cannot impose a tax lien during your Chapter 7 case unless it previously filed a notice.
A tax lien filed before your bankruptcy, however, continues in effect. The bankruptcy court cannot set aside a tax lien as long as it was filed properly before your Chapter 7 case.
To the best of my recollection there was never a tax lien filed before this one. Yes, it was a Chapter 7 Bankruptcy. I have a copy of a memo dated June 17, 2003 stating that the IRS did not file a Notice of Tax Lien against me. Sounds like I need to go to a tax attorney to get this straightened out. Thank you for your answers.