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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39169
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I need to know if I can discharge an IRS tax debt in chapter

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I need to know if I can discharge an IRS tax debt in chapter 7 bankruptcy. Let me tell you some about it. The tax debt is for income tax for tax period ending 12/31/2002. A tax return 1040 was sent in in early 2003 and the tax debt was assessed by IRS in later 2003. Now in 2009 I still owe the tax debt along with civil penaties. The civil penalties are by far the largest part of this tax debt. Also in late 2008 the IRS filed a tax lien in my county of residence. There is nothing the IRS lien can collect from, no job, no bank accounts, no car, and no real estate...ZERO assets. I am currently in the middle of an Offer In Comproise for the 2002 tax debt but it is looking as though it may be rejected. I know that the tax lien should survive the chapter 7 bankruptcy right?and would the civil penalties also survive the bankruptcy? I know I can't file BK right now while in an Compromise. Can the tax debt along with the civil penalties be discharged in chapter 7? & Motion to avoid tax lien?

If the tax return was filed more than three years ago, it's dischargable in Ch. 7 bankruptcy. Simple as that.




Customer: replied 8 years ago.
Is that all you have to say?? Did you read all the details of my question??

I'll be happy to talk to you all day long if you like. Seriously, though, the botXXXXX XXXXXne is that you can blow away this issue entirely with a Chapter 7, if that's you're goal. The offer in compromise may work, but if it doesn't you're right back to the Ch. 7. So, you can either wait, or withdraw the offer -- and that pretty much moots all of your other questions, unless I'm missing something (which is certainly possible).


Feel free to ask me other specific questions, if you need clarification.




Customer: replied 8 years ago.

Considering my entire original question...


Your saying an IRS TAX LIEN will not survive a chap 7 ?


You are saying CIVIL PENALTIES will not survive a chap 7 ?


How long have you been retired?


Do you feel confident with your knowledge of the current Bankruptcy Laws in 2009?

Customer: replied 8 years ago.
Answer my last question and the money is yours MR Attorney
Customer: replied 8 years ago.
Last four questions to be exact!
A perfected tax lien survives only as to property of the debtor which was in existence prior to the filing of the bankruptcy. Property acquired after filing cannot be attached.


Penalties are generally dischargable, unless they are based on fraud, or failure to pay employment taxes, i.e., FICA.


Figuring out whether your particular taxes are discharable requires a fair amount of work, but if you're talking about the run of the mill, "I didn't pay taxes on time, because I didn't have any money left to pay with," then those taxes and penalties will be discharged, assuming they fall outside of the three-year window.


Nothing particularly new in the Bankruptcy Code has occurred since 2005. Case law is always changing, but again, you seem to be discussing a fairly typical tax liability, so there would be no likely change.


This forum, however, is for general guidance, not for a rigorous analysis of your specific circumstances, for which I would be charging you $350 per hour. So, you can't expect me to tell you more than what the general bankruptcy law provides, which is that the taxes and penalties are dischargable.





socrateaser and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.

Remember me? Perhaps quickly review previous questions and your answers to this same matter. I'll be glad to pay you again for true honest answers.

I'm starting HERE as a continuance to what you have already answered

No fraud, failure to pay employment taxes etc. Just straight income tax liability from 2002 along with huge amounts of penalty and interest from not being paid. Like I said, there is nothing the IRS tax lien can attach to nothing... I currently have nothing..Zero assets.


If I filed ch 7 next week while there is nothing in my name, zero assets. Then after I file ch 7 and get a discharge and perhaps start to gather somethings.. car, job, maybe a house some day...You say the tax lien placed by IRS before bankruptcy filing will have no effect on my assets aquired after filing bankrutpcy along with a granted discharge?


If I was your client would you advise me to file chapter 7 NOW with my current situation considered?


You must wait until 30 days after final disposition of the offer in compromise. So, you can't file until you get rid of that issue. I would want to examine each and every one of your various tax issues to make certain that by filing, we wouldn't be giving up anything (and s that you couldn't sue me for malpractice).




Customer: replied 8 years ago.

If my OIC is rejected and the 30 days allowed to appeal has passed, you say then would be the time to file ch 7 if thats my choice.


Or, If I withdraw my OIC and then 30 days has passed, you say then would be the time to file ch 7 if thats my choice.


Do I interpret you correctly? YES or NO

Customer: replied 8 years ago.

Do you currently 'practice' in Bankruptcy Law?


Would you mis-lead ANYBODY on this website with your answers?


Finish with my last questions and the money is yours!


Customer: replied 8 years ago.
Don't like my questions?

Dear friend: I have gone to HEROIC efforts to explain the nature of our relationship in this forum. Please click on my "IMPORTANT legal information" link, found in my signature, if you haven't already done so.


That said, The timing calculation of a tax discharge is complicated, so get out your spreadsheet software. The taxes will be non-dischargable if the bankruptcy petition was filed within 240 days after the date of assessment (plus the time period plus 30 days during which any offer in compromise was pending; plus the time period plus 90 days during which a stay of proceedings was in effect in a prior case during that 240-day period). 11 USC §507(a)(8)(A)(ii).


Concerning your personal questions, I respectfully XXXXX XXXXX discuss anything other than the law. You can do with the information as you choose, and you can pay if you want -- or not.

Terms and Conditions: By your continuing in this conversation with me, or by your clicking "Accept", you are expressly agreeing to all of the following: (1) our communication is for entertainment purposes only; (2) you are not consulting me in my professional capacity as an attorney; (3) you do not seek to establish an attorney-client relationship with me, nor do I with you; (4) you will not rely on anything I say and you will obtain appropriate legal counsel via a traditional/office consultation with an attorney licensed to practice in the jurisdiction where your legal issue arises (and you may not use our communication to avoid taxpayer penalties imposed by the U.S. Dept. of Treasury); (5) by communicating with me in this public forum you are irrevocably waiving any right to privacy, confidentiality and attorney-client privilege concerning the matters discussed. You further separately declare that any payment made by you is not consideration for this contract, nor offered for any services rendered by me on your behalf, but rather is made in genuine admiration and respect for my desire to help others. If you do not agree with these terms and conditions, then you must advise me immediately.

Customer: replied 8 years ago.

The date of tax assessment was in year 2003.


The date of my compromise is in 2009.


Would I still have to wait 30 days after the final disposition of the OIC to file ch 7?

Customer: replied 8 years ago.

I want to pay you, Sir!


I don't think there is anything else you can tell me.

Not according to the statute. But, I'd probably wait 30 days anyway, so there would be no suggestion that you were attempting to defraud the creditor, because this particular creditor has unlimited financial resources with which to craft new law, when it thinks it's being messed with.





socrateaser and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.

Hello again, hope your day is well!


Back to your first accepted answer on my original question, you stated "A perfected tax lien survives only as to property of the debtor which was in existence prior to the filing of the bankruptcy" ( We are talking ch 7, right?). Additionally, you stated "Penalties are generally dischargeable unless they are based on fraud or failure to pay employment taxes, ie FICA" (We are talking Civil Penalties which consists of Penalties & Interest, right?)


Now, can you tell me where ( Code, Section, Page, Paragraph and IRS Publication #) I can find reference to your statements in the US Bankruptcy Code and in IRS publications?

Customer: replied 8 years ago.

Please be specific with your references so I can find it on the WWW



Yes. Ch. 7.


Yes penalties and interest.


I could spend hours giving you express references (and I did give you one in a prior answer). However, this is not the way to handle the situation. Since you are looking for all this very precise info, it means that you are either trying to conduct a do-it-yourself bankruptcy, or you don't want to annoy your bankruptcy attorney with details, but you want to know how it all works (or, you're a paralegal or attorney who doesn't know bankruptcy law, but whatever).


The solution, rather than nickeling and diming my answers, is to buy this publication, and then you can look whatever you want up for yourself.


There are other bankruptcy guides out there (e.g.,, but the one I've just pointed you to is probably the most cost effective.


The CEB guide is focused on California. However, the overwhelming majority of bankruptcy law is based on federal law, and while there may be a few things that could catch you, they would be extremely narrow situations. The questions that you are asking are applicable throughout the USA.


Customer: replied 8 years ago.

I thought you were entertaining me on this forum. Did you not tell me this was all for entertainment?


Is it your responsibility to influence how I use or process this entertaining input?


Is it your obligation to determine why I ask the questions I do?


Am I too inquisitive about the details of entertainment I choose?


That's what people are paying for is their choice of questions, right?


If you don't like my nickle and dimes, then so be it. I could give them to somebody else!



I was trying to save you time, frustration and money. But, if you want me to provide express references to specific issues, please enumerate the questions individually, so that I know exactly what you want.




Customer: replied 8 years ago.

You say a perfected tax lien survives only as to property of the debtor which was in existence prior to the filing of a chapter 7 bankruptcy not afterward .


You say civil penalties are generally dischargeable in a chapter 7 bankruptcy unless they are based on fraud or failure to pay employment taxes, ie FICA.


I want to know where I can validate both of your above statements with free information on this WWW.


I do not want any other information or small talk other than what I asked for. Thanks


Perfected tax lien: 11 USC §506(a)


Penaties: 11 USC §507(a)(8)(G), and 11 USC §523(a)(1), (7).


Now, before you read these statutes and then get annoyed that they're damn near impossible to understand, I concede that they are damn near impossible to understand, which is why lawyers purchase scholarly treatises such as the one I previously pointed out to you -- because we all need help with the interpretation of the law, where it gets this complex.






Customer: replied 8 years ago.
Do you know for a fact that your answer to my question is contained within the statute links you just now provided?

If your answer is yes then you must understand the statute language, right?

I understand the law, however, there are corner cases for everything, and I have not analyzed your particular tax liabilities, penalties, etc., in concert with the appellate law for the federal jurisdictions covering your place of domicile. This issue is quite complicated.


You should discuss it with your bankruptcy attorney.



Customer: replied 8 years ago.
Was that a yes that the statutes in fact contained the answer to my questions?

Was that a yes that you understand the statute language?
What are you wearing?
Customer: replied 8 years ago.
??? That was random...goodbye!

I've done everything I can, within the limits of this forum. If you need more specific assistance, you will need to contact local legal counsel.


I wis you the best of luck.

socrateaser and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 8 years ago.
You must be at your wits' end, just relax now
Customer: replied 8 years ago.
Thank you for your effort, I commend you.

You were quite entertaining.

You too.


We'll always have Paris! -- Bogart, Casablanca

Customer: replied 8 years ago.
Would I list everything on my credit report on the chapter 7 BK schedules?

I know all negative line items should be scheduled along with all open accounts.

Should I list all closed accounts in good standing?

Is there any stratigic advantage to listing closed accounts in good standing on ch 7 schedules?

Please answer in some detail instead of yes, no answers.

Lots of stuff on your credit report is about old closed debts that are irrelevant to the bankruptcy estate, so no. You just want open accounts.


The bankruptcy trustee has a duty to the creditors. A closed account is not a creditor, so it's irrelevant to the case, unless it was a charge off and the creditor never sold the debt to a debt collector, in which case the creditor still holds the right to receive payment, so you would want to list that creditor.


If you have a doubt about a creditor, then list it. Even if you miss a creditor, must creditors are discharged in Ch. 7 whether or not they are listed, unless the creditor shows that had it been noticed at the time of the bankruptcy its debt would not have been discharged.


Was that detailed enough?


Customer: replied 8 years ago.
Pretty good...but I want this clarified-


(These firms may assist consumers with clearing/building good standing consumer credit reports)


Forget the trustee or creditors, these questions are not applicable to them, they are for the consumer concerned about rebuilding credit in the future!

I don't think anything is relevant to rebuilding credit other than what appears on the reports of the three major credit reporting agencies (Equifax, Experian and Transunion). Different vendors use different agencies, depending upon who gives them the best price for database access. For real property loans, the lenders look at all three reports, average the numbers, and then ask for clarification for each negative entry.