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Tax Debt and Bankruptcy Blog

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By Michael S. Anderson of Anderson Tax Law logo for Arizona tax attorney Michael S. Anderson P.C.
  • The IRS Plans to Take Retirement Accounts and Homes – Aggressively Searching for Revenues

    IRS Levy

    In the past, the IRS was careful about seizing retirement plans and homes in order to collect debt.  Even if asked to do so, revenue officers were reluctant.  Apparently and according to this recent article from the examiner,  “Obama’s IRS to initiate full court press, warn tax law experts”,  someone has changed their mind.  I have seen a more aggressive attitude as well, and in some cases an unwillingness to accept an alternative arrangement unless the equity in an account or home was looked at first.

    If this holds true, it will become more important for taxpayers to be aware of tax lien recordings.  These recordings make it difficult to discharge income tax in bankruptcy and to emerge unscathed.  The lien when recorded timely and properly, will remain attached to the retirement account asset and the home equity if any, after the chapter 7 is concluded.   It will have to be paid at least it’s value in a chapter 13 bankruptcy.

    This will make the bankruptcy filing less effective, or not at all depending on the taxpayer’s circumstance.

    If you know you will have serious tax debt or have serious debt already, and the tax lien has not been recorded, you should consider moving forward with your plans to seek experienced counsel regarding your options.