Bankruptcy

It is important for taxpayers to know that certain income tax liabilities can be discharged in bankruptcy.

What you should do if you have not filed your tax return for years... ...continue How to negotiate a Monthly Installment Agreement... ...continue What you need to know about the IRS Offer in Compromise program... ...continue

When a taxpayer is unable to resolve his or her outstanding tax liability with an installment agreement, or through the negotiation of an offer in compromise, the taxpayer should explore the bankruptcy option.

Under current bankruptcy law, Federal and State income tax liabilities are dischargeable in a Chapter 7 Bankruptcy if all of the following statements are true:

• The tax year at issue is at least three (3) years old;

• The tax return was filed by the taxpayer at least two (2) years prior to the filing of the bankruptcy petition; and

• If there has been an additional assessment by the taxing authority (e.g. after an audit) it has to have been assessed at least 240 days prior to the filing of the bankruptcy petition.

There are certain activities which toll (extend) the running of time in the above rules. A thorough analysis of your circumstances is needed to determine the optimum date for filing a bankruptcy.

To analyze a taxpayer's particular situation, we obtain a Power of Attorney (IRS Form 2848) from the taxpayer, and then order a complete record of accounts from the Internal Revenue Service and California Franchise Tax Board. With this information we can determine which tax years are dischargeable and which years cannot be discharged. We can also advise as to when currently non-dischargeable taxes will become eligible for discharge.

Once that determination is made, the taxpayer must retain a bankruptcy attorney experienced in the discharge of tax liabilities. That attorney can then review all of the other financial issues which must be examined to determine if the taxpayer qualifies for filing bankruptcy.

The IRS uses experienced auditors and tax collectors.
Shouldn't YOU have the benefit of an experienced professional with YOUR best interest in mind?

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