One aspect of all laws, and tax laws in particular, is that they change. Not all laws and not all the time but it's vital you are aware of the current law if you are considering using bankruptcy as a tool to deal with your tax debt. An appointment with a bankruptcy attorney should assist you in understanding your options.
If you have income tax debt due and your financial position is difficult, one option can be to file for bankruptcy. As a general rule Bankruptcy can be used only to discharge income taxes and not taxes which are collected from third parties but not properly paid over to the government (so called "trust fund taxes"). Knowing the law is essential in order to make the right decision.
Seattle Bankruptcy Attorneys, New Jersey Bankruptcy Lawyer, Phoenix Bankruptcy Lawyer,
Most people who file Bankruptcy file one of two types, either a Chapter 7 or Chapter 13. Each of these types of bankruptcy applies a different set of rules for the discharge of a tax debt. Under Chapter 7 you can obtain a discharge for all your debt including certain of your unpaid taxes. With Chapter 13, you are required to pay some or all of your debt in installments. These debts usually include payment of all of your tax debt, but you may be eligible to pay less than the full amount of the penalties and interest and other unsecured debt, such as credit cards. Your decision will depend on professional advice taking into account the amount of money owed, your ability to pay, and what property would be available to creditors if you don't pay.
Conditions to Discharge Tax debt
Again it's important to be aware of the different aspects of the tax law involving unpaid taxes and bankruptcy. First there's the assumption that you haven't tried to evade tax or submitted a return which is fraudulent. Liabilities assessed from a determination you have committed tax fraud cannot be discharged in bankruptcy. Then there are the time factors to follow. As a general rule the underlying tax return must have been due at least three years ago and you must have filed the return at least two years ago. Audit assessments on returns which meet the requirements must have been made at least 240 days before you file bankruptcy on that liability.
Tax law is complex and highly regulated. There is no getting around it. In bankruptcy, in general you will not be eligible to file, let alone get a discharge unless your tax returns for the years immediately prior to the bankruptcy have been filed. In addition, you cannot discharge a tax in bankruptcy unless the underlying tax return has been filed.
Creditors have rights
In filing for bankruptcy, your creditors have the right to a copy of your latest tax return which must be supplied upon request. Bankruptcy is never a private matter and it is best to avoid having to take such drastic action to handle your tax liabilities in the first place by filing your tax returns on time every year and making arrangements to pay the tax.
*This article does not constitute legal advice and does not establish an attorney-client relationship.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Bankruptcy Rules
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment