Can you file bankruptcy on a state tax lien

For example, if the house is surrendered in bankruptcy, the taxes will be paid by the mortgage company when the property is foreclosed on. If you are surrendering a vehicle in a Chapter 7 bankruptcy, you will incur taxes until the taxing entity has noted you are no longer the owner of the property.

You should contact your local taxing authority to determine the proper procedure for notifying them that you are no longer the owner of the vehicle.

In some cases this means surrendering the license plates on the vehicle or it may means showing that the title of the vehicle has been legally transferred to another person or entity. If you are filing a Chapter 13 bankruptcy, the taxes on real or personal property owed on the date of bankruptcy filing will be included in the Chapter 13 bankruptcy payment.

This would include any taxes due and payable as of the date you file bankruptcy. For any taxes incurred after the date of bankruptcy filing, you will need to pay those taxes directly to the taxing entity; they will not be paid in your bankruptcy.

However, any taxes assessed in the future will be your responsibility, and you should make a direct payment to the taxing entity. The same would apply to taxes due on a house or land if the taxes are not escrowed into your monthly mortgage payment. Employment Taxes. Sales Tax. Property Tax. Bankruptcy employment tax property tax sales tax tax.

About the author. Henrik Mosesi, ESQ. Related posts. May 13, Which Tax Debts Get Discharged? Taxes must meet the following criteria before being forgiven: The taxes are on wage-related income or gross receipts business income. The income taxes were due at least three years including valid extensions before you filed the bankruptcy. You filed your tax return at least two years before you filed the bankruptcy case. If you did not file a return, if you filed the return late, or if the IRS filed a substitute return for you, some bankruptcy courts have held that those taxes will never qualify for a discharge.

IRS tax assessment—the process of entering the tax on the books as a tax liability—occurred at least days before filing for bankruptcy. This period could be lengthened if you had pending an offer in compromise or if you filed a prior bankruptcy case.

You didn't commit fraud or willfully try to evade paying your taxes for the tax year in question. What Happens to a Nondischargeable Tax Debt? Chapter 7 bankruptcy. Except for the automatic stay, bankruptcy cases don't have much effect on tax debts that can't be discharged. Once the bankruptcy court issues the discharge, the court clerk will close the bankruptcy case.

A case might remain open if the court-appointed trustee has to gather and sell the debtor's nonexempt property. Chapter 13 bankruptcy. How federal tax liens are imposed. The IRS file a notice in order to get a federal tax lien against your property. The notice must be filed in the county where you live or where the property is located.

Once the IRS files its notice, it has a lien against all property -- real or personal -- that you own. The lien attaches to all property that you own from and after the date that the IRS files its lien.

Federal tax liens continue in effect for up to 10 years after the IRS assesses the taxes that you owe. What happens to tax liens when you file for bankruptcy depends on whether or not the tax lien was in place before you filed for bankruptcy. 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. Tax liens may be paid, in whole or part, through the bankruptcy process. A bankruptcy trustee is appointed after you file Chapter 7 to administer and liquidate assets in your bankruptcy estate to raise money to pay your debts. In some Chapter 7 cases, debtors have assets that the trustee can sell to pay creditors, including the IRS.

The IRS is entitled to any money raised through the sale of assets covered by a federal tax lien except to the extent there are prior mortgages or security interests.

Unfortunately, tax liens usually are not paid in Chapter 7 cases.