After the NFTL Expires, it’s District Court for you

[Bruce D. Kowal]

"The tax lien expires in 10 years, so we just wait it out." ⏰

This might be the most dangerous advice in estate planning.

Here's what most practitioners miss: 📚

While everyone focuses on the 10-year NFTL expiration, the IRS has a nuclear option hiding in plain sight.

Under IRC §7401, the IRS can file suit in federal district court before the Collection Statute expires and convert your "temporary" tax problem into a renewable judgment lien lasting 20+ years.

The timing game becomes Russian Roulette with a countdown timer. ⚡

Picture this scenario:
→ Month 118: "Almost there, just need to wait it out..."
→ Month 119: "Few more weeks and we're free..."
→ Day 3,649: WHAM - IRS files federal lawsuit

Suddenly your brilliant executor strategy becomes a catastrophe. 💥

Here's why judgment collection is terrifying:

Once the IRS gets a federal court judgment, you're no longer dealing with revenue officers following IRM procedures. You're in federal district court with Federal Rules of Civil Procedure.

❌ No more Collection Appeals Program
❌ No more installment agreement negotiations
❌ No more administrative remedies
❌ No more Form 12277 lien releases

Instead you get:

✅ Compelled depositions under Rule 69
✅ Forced financial disclosure
✅ Court-ordered payment plans
✅ Contempt sanctions (including jail time)
✅ Judgment liens that survive death and attach to inherited property

The estate goes from "problem solved" to "multi-generational nightmare" in 24 hours. 😱

This is why estate planning around tax debt requires sophisticated timing strategies, not calendar watching and hope.

The IRS has a loaded gun pointed at your estate plan. Do you feel lucky? 🎯

Well, do you? Because with judgment liens lasting 20+ years and federal court collection powers, you better not miss.

Question: Is your estate plan accounting for potential judgment liens, or are you betting the IRS won't be proactive in the final months before CSED expiration? 🤔

[Obviously, IRS is not going to chase a $25,000 tax debt beyond the ten years.  But what is the IRS cut off for a lien that is worth pursuing?  $100K?  Do you know?]

The stakes are too high to guess wrong.

#TaxPlanning #EstatePlanning #IRS #RealEstate #TaxDebt #JudgmentCollection

Bruce D. Kowal is a Certified Public Accountant with an MS in Taxation, maintaining a nationwide practice focused on IRS Practice and Procedure and federal taxation of real estate.