It's Tax Season - Avoiding an IRS Tax Lien Protects From Bankruptcy

January marks the start of the New Year. And if you pay tax in Chicago it signifies the time you need to begin the tax filing process. If you have had any difficulty filing your taxes in the past this can be a very stressful time.

When taxes are not filed correctly, filed late or possibly not filed at all you run the risk of of having the IRS audit your tax account and looking back 10 years. If there is some question about your filing history or it appears that you owe the government money then they will put tax liens on your home, car and any other personal property you have.

Tax liens are a result of owing the government money for taxes. Unfortunately the lien creates an issue because when there is a lien on your assets you cannot sell them to make money to pay off your tax debts. 

Tax lawyers in Chicago will tell you that tax liens can cause major problems and some may even consider bankruptcy to escape them. But foreclosure and bankruptcy are not solutions for those with tax liens.

If you successfully file for chapter 7 or chapter 13 bankruptcy you will quickly learn that tax debt will not be included when discharged. This means that you still have to pay the money you owe the government after filing for bankruptcy.

When you foreclose with a tax lien any income that comes from the liquidation sale of the property goes to the pay your debt. However this can leave you still responsible for the mortgage you owe on your home.

In one infamous story Willie Nelson found himself owing back taxes because his accountant had not been paying what he should have from Nelson's earnings. The issue resulted in tax liens being put up against his assets some assets were put up for auction to raise the money necessary to pay the debts.

For a star like Nelson the solution came by recording a new album which garnered enough earnings to pay the back taxes and remove the tax liens. Willie Nelson's tax lien story had a happy ending however it is not that simple for the average American.

If you anticipate having a tax issue the sooner you contact tax lawyers in Chicago the better. They can help you navigate the legal process of dealing with your debts while helping you find a solution that will work for you.

 Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.