• Jim Payne

Bankruptcy does not necessarily get the IRS off you back

One of the benefits of filing for bankruptcy is that there is an automatic stay that prohibits the IRS from taking any further collection actions while proceedings are ongoing. On the other side of the formula, the Statute of Limitations that limits the time that the IRS has to collect is also put on hold for the duration of the filing plus 6 months. A Wisconsin couple recently found out that the automatic stay was not an absolute thing.

A district court, Pansier v. U.S., 2019 PTC 494 (E.D. Wis. 2019), affirmed a bankruptcy court's decision to lift the automatic stay. This allowed the IRS to Levy the debtors pension even though the bankruptcy case was still in motion. The reasoning from the bankruptcy court was that the pension was exempt from the regular creditors and as a result still available to the IRS outside of the bankruptcy.

This case shows once again that the IRS has far better collection tools than most creditors.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.


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