IRS Collection Efforts after Discharge in Bankruptcy – Paul Gaukin CPA

BankruptcyIf a taxpayers debt is discharged in bankruptcy the IRS can no longer attempt to collect the tax from the debtor. There are exceptions to this rule that anyone seeking protection from the IRS in bankruptcy should be aware of.

Prepetition Tax Lien

Although the IRS is unable to pursue the taxpayer for future income or assets once they have been discharged in bankruptcy, the IRS can still pursue the taxpayer if they had filed a tax lien against them for exempt or abandoned assets if the lien was filed before the bankruptcy commenced.

This can be a very hard thing for a taxpayer that was shielded in bankruptcy from other creditors for certain assets but for which those same assets are not shielded in regard to the IRS. A few other these assets that the IRS can still pursue a taxpayer after bankruptcy include the homestead exemption and their personal IRA.

401k & ERISA Qualified Pension

In the event the taxpayer’s debts are discharged in bankruptcy, the IRS can still pursue a taxpayer for their 401k and ERISA qualified pension even If the IRS had no lien against these assets prior to the bankruptcy. This is the ruling that has been given recently by the Tax Court where the IRS argued that the assessment lien was not extinguished in the bankruptcy as to the excluded property.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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