Receiving a Chapter 7 discharge can be an exciting time because it is a fresh start ahead. You are no longer personally liable for those personal debts existing at the time you filed your Chapter 7 Bankruptcy. But be beware of one snag in the machinery – the IRS. If an IRS federal tax lien existed at the time you filed your bankruptcy case, that federal tax lien may survive your Chapter 7 discharge. Even if the underlying tax liability is discharged by the Chapter 7, the federal tax lien still survives. While you are no longer personally liable on the discharged tax debt, the lien still attaches to your personal property you owned at the time of filing (but not post-filing acquired property). It can still be resurrected and used to collect against property you owned at the time of filing. The reason this is important is because many times taxpayers mistakenly believe the lien is also extinguished by the Chapter 7 discharge. This is not true. A recent 2020 case, Webb v. IRS, No. 1:17-cv-00058 (S.D. Ind. 2020) illustrates the nuances of a federal tax lien’s rebirth years after a Chapter 7 bankruptcy discharge.

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Jason Morton is a Partner in a small boutique tax law firm, Webb & Morton PLLC, with offices in both North Carolina and Virginia. He maintains the law firm’s very active

Blog, as well as maintaining a Vlog on YouTube. Jason…

Jason Morton is a Partner in a small boutique tax law firm, Webb & Morton PLLC, with offices in both North Carolina and Virginia. He maintains the law firm’s very active

Blog, as well as maintaining a Vlog on YouTube. Jason has published several featured articles with TaxNotes, the NC Bar Association Tax Section, Autism Parenting Magazine, local newspapers and most recently, working with Cointelegraph and Bloomberg Tax. Jason is also an Officer in the Army National Guard, most recently serving an active duty tour from 2016 to 2018. Most importantly, above all else, Jason is proud Autism Dad.