Legal Question in Tax Law in Illinois

Our house is about to go to foreclosure. We have a Federal and IL state liens on it for business taxes. When it is foreclosed upon, will the tax liens be vacated? We have not paid on them due to ill health and disability. We are under the amount to file taxes but do anyway. Only receiving disability payments. We filed bankruptcy and it has been closed but the business liens still followed according to the law.

Asked on 9/19/13, 8:51 am

1 Answer from Attorneys

Virginia Prihoda Law Offices of Virginia Prihoda

Your federal and Illinois tax liens are "general liens" meaning that they attach to anything that you (assuming the liens are filed in your name and your name is on the title to the property being foreclosed) own or may acquire after the filing of the liens. If your house goes into foreclosure, the foreclosing lender is most certainly the first lienholder, and all liens that come after the mortgage lien that is being foreclosed will be wiped out AS TO THE FORECLOSED PROPERTY. So you don't have to do anything if the bank goes to full foreclosure. However, the liens will remain alive to reach any other asset you may have or may acquire during the statute of limitations on collection (which is normally 20 years for Illinois and 10 years for IRS). You might be a candidate for an Offer in Compromise--talk to a qualified tax professional to help you with this (me or someone else). Business taxes are not dischargeable in bankruptcy.

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Answered on 9/19/13, 10:43 am


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