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Does a tax lien NFTL recorded in my county post petition…

Customer Question
Does a tax lien...

Does a tax lien NFTL recorded in my county post petition hinders the Trustee's ability to collect equity through the sale of my home

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

California

Accountant's Assistant: Has any paperwork been filed?

Bk filed over a year ago and tax lien recorded may 2017

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

Bk is still open

Submitted: 4 months ago.Category: Tax
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10/18/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,222
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
Verified

Hello. Thank you for choosing this Q&A service for assistance. MY name is Angela. I will be assisting you.

Q: Does a tax lien NFTL recorded in my county post petition hinders the Trustee's ability to collect equity through the sale of my home

A: In brief, the answer is yes. SEE BELOW:

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A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.

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How a Lien Affects You

  • Assets — A lien attaches to all of your assets (such as property, securities, vehicles) and to future assets acquired during the duration of the lien.
  • Credit — Once the IRS files a Notice of Federal Tax Lien, it may limit your ability to get credit.
  • Business — The lien attaches to all business property and to all rights to business property, including accounts receivable.
  • Bankruptcy — If you file for bankruptcy, your tax debt, lien, and Notice of Federal Tax Lien may continue after the bankruptcy.

REFERENCE SOURCE:

https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien

If you do not require further assistance with this matter, I ask that you please take the time to scroll to the top of the page and select 3 or more stars to positively rate my response so that I can receive credit for assisting you. A 5 star rating is greatly appreciated. Thank you in advance.

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Customer reply replied 4 months ago
The trustee has a judgement against me as a result of my bk filing prior to the tax lien being recorded. Does the tax lien trump their judgment>
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

Hello again.

Is the BK a Chapter 7? If so, the following applies.

----------------------------------

Tax Liens Imposed After Your Bankruptcy Filing

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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.

Tax Lien Notices Filed Before Your Bankruptcy Filing

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.

REFERENCE SOURCE:

https://www.nolo.com/legal-encyclopedia/tax-liens-chapter-7-bankrutpcy.html

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Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

Please ignore the information in blue, not sure how that got there.

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Customer reply replied 4 months ago
Sorry, I just realized that the tax lien was filed against my wife who was not on the bk filiing. We own the home as joint tenants. Does that effect their ability to sell our home?
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

Yes. SEE BELOW

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Generally, where only one of the joint tenants owes taxes, the lien attaches to the taxpayer’s property interest and the entire property may be sold pursuant to judicial sale under IRC § 7403, although the non-liable joint tenant must be compensated from the sale proceeds. If the Service enforces the tax lien against a taxpayer’s interest in a joint tenancy and sells it, the purchaser acquires the taxpayer’s partial interest in property, but most states then treat the joint tenancy as having been converted to a tenancy in common (discussed below). See generally, United States v. Rodgers, 461 U.S. 677 (1983).

REFERENCE SOURCE:

https://www.irs.gov/irm/part5/irm_05-017-002

Under title Joint Tenancy (near bottom of page)

A positive rating is greatly appreciated. Thank you in advance.

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