Posted in Asset Protection,Tax Law & IRS Defense

Interest follows the tax liability.  See  In re Burns, 887 F.2d 1541 (11^th Cir. 1989).  If the tax debt is non-dischargeable, then the interest accruing on the tax debt will be non-dischargeable.  “[A] tax penalty is discharged if the tax to which it relates is discharged […] or if the transaction or event giving rise to the penalty occurred more than three years prior to the filing of the bankruptcy petition.”  In re Burns, at 1544.  If the tax liability is non-dischargeable, but the penalty portion of the liability is, then the interest which follows the tax is non-dischargeable but the interest which follows the penalty is likely dischargeable.

Posted in Asset Protection,Tax Law & IRS Defense

Many taxpayers assume that the IRS cannot collect for income taxes that were owed prior to, but discharged in, a Chapter 7 bankruptcy.  That is not always the case.  It is true that the Chapter 7 bankruptcy discharges the IRS claim as to personal liability (assuming all elements for dischargeability are met); however, many times the IRS will record a federal tax lien for the amount(s) owed.  If the federal tax lien is recorded prior to the bankruptcy, it will usually survive a Chapter 7 discharge.  A tax lien that was recorded prior to the Chapter 7 bankruptcy attaches to most pre-bankruptcy property, including property that would otherwise be exempt from creditors under Florida law such as a taxpayer’s homestead, IRA, or 401(k).  The lien gives the IRS the ability to seize or demand payment up to the value of the secured property after bankruptcy.