State Tax Lein - What's this mean, will they take federal refund?

[phoenyx]

I'm filing personal Chapter 7 bankruptcy within the next 1-2 weeks. I own an S-Corporation which is massively in debt, and is the reason I'm filing Chapter 7 (I personally guaranteed most of its debt.)

The S-Corp is past due in paying sales taxes collected, and I just found out while pulling a credit report last night that the state filed a State Tax Lein with my county's register of deeds.

The lein is against "all your property and rights to property both real and personal in the below total due, plus any future penalties, interest or other costs. This lein attaches to property you own now and that you acquire."

I obtained a copy of the lein, and it's all from assessments that total up to about $3000. The assessments are incorrect, and will be more like $40 for these dates once I make the S-Corp's sales tax return filings and they update their records.

Question: In the meantime, before their lein amount is fixed, if I file a federal tax return that gives me a refund, are they going to automatically take it? Or does it not work this way?

[Minnymouth]

As to whether the State can take your Federal refund, I don't know, need to talk to your attorney about this or someone at the tax office.

Since the tax lien is a state tax lien and against ANYTHING you acquire, own, or try to sell, I imagine this puts them in a position to take your Federal return to justify the tax lien... They may notify the Federal to return it to them instead of you......

Unfortunately, the tax lien is not dischargable in bankruptcy. Same principal with property taxes, etc.....