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Maverick, Attorney
Category: Bankruptcy Law
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Experience:  20 years of professional experience
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I had a Federal tax lien filed against me more than 10 years

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I had a Federal tax lien filed against me more than 10 years ago and none of the lien was ever paid. The IRS did not renew the lien and presumably let it expire on Aug. 5 2008, the last day to refile according to the Notice of Federal Tax Lien - form 668 (Y)(c).Hasn't the 10-year statute of limitations expired? If at anytime in the future the IRS tries to levy a bank account or somehow go after these back taxes, don't I have the defense of the statute of limitations and those 1997 back taxes are no longer owed? Furthermore, I received a Chapter 7 discharge in Bankruptcy in 2005. Thank you for your help. John

Usually 10 years after a tax is assessed, a lien releases automatically unless the IRS refiles it. To remove any uncertainty about whether a lien is still enforceable when the notice shows the assessment is more than ten years old, the IRS is required to refile its notice of tax lien within a one year period ending ten years and 30 days after the date of the assessment. See IRC 6323(g).


Failure to refile at the appropriate time does not affect the validity of the lien, but it does nullify the legal effect of the prior filing. In the case of a late refiling, any other security interest arising after the IRS's prior filing but before the IRS's refiling obtains a priority to the same extent as if no notice of tax lien had been filed prior to the time of the late refiling. In other words, the IRS loses it priority based on time / first to file concepts to evaluate lien validity.


As to your question about the 10 yr statute of limitations, IRS § 6502. Collection after assessment is what applies.


IRS Section 6502:


(a) Length of period Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun-


(1) within 10 years after the assessment of the tax, or


(2) if-


(A) there is an installment agreement between the taxpayer and the Secretary, prior to the date which is 90 days after the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer at the time the installment agreement was entered into; or


(B) there is a release of levy under section 6343 after such 10-year period, prior to the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer before such release. If a timely proceeding in court for the collection of a tax is commenced, the period during which such tax may be collected by levy shall be extended and shall not expire until the liability for the tax (or a judgment against the taxpayer arising from such liability) is satisfied or becomes unenforceable. (b) Date when levy is considered made The date on which a levy on property or rights to property is made shall be the date on which the notice of seizure provided in section 6335 (a) is given.





What this means is that if they IRS sued or began levy proceedings against you for the tax debt with in ten years of when it was owed then they are with in the 10 yr statute of limitations. Once they get a judgment or tax lien, then they can revive the lien indefinitely , but lose priority status on the lien if they do not refile in the 10 yr time frame.


As to your inquiry about Bankruptcy discharge, it is a good one and one that lawyers often misunderstand. It is critical to understand that while the tax claim may be discharged in bankruptcy, the tax lien will survive and can be enforced against assets previously thought to be exempt. In most cases, what this means is if the IRS filed a Notice of Federal Tax Lien, the Lien survives the bankruptcy even though the underlying dollar liability is discharged. In other words, say your tax calim was for 10k and the IRS managed to file a tax lien against your assets which were worth 4K, the 4k lien would survive the BK but the 6k that was not secured by collateral would be discharged.


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