Form 945 – the absolutely essential but little known trick about “backup withholding”…

James Quezada, Simona Quezada (plaintiffs) v. Internal Revenue Service (defendant) Tax questions? Call the Tax Resolution Institute! (818) 704-1443 In this Chapter 11 case the IRS won a judgment. The court said to the plaintiffs, the Quezada's, that "You filed your taxes wrong and it's still your responsibility to file them right. In fact there's a 'do over' and you didn't do that, either." This situation requires the use of IRS Form 945, a little-known and infrequently invoked remedy that many CPAs and Tax Attorneys even with decades of experience has never seen nor heard of. Follow this [...]

Avoid These Tax Traps if you Need to File for Bankruptcy

Do you think that income taxes can be discharged in bankruptcy?  They can. One of the greatest pitfalls that prevents you from being able to discharge at least some of your tax liability in bankruptcy is having a clear picture of your complete tax situation. A crucial step (among many) your tax professional needs to take is to obtain copies of your IRS account transcripts for each year to ensure that you (1) know which years are filed (and when) and (2) if and how much you owe for each year. Once you have this information, you know where to [...]

The Rules For Discharging Tax Debt Through Chapter 7 Personal Bankruptcy

Discharging Tax Debt Through Chapter 7 Part 2 of 3 When it comes to discharging tax debt through personal bankruptcy, the Internal Revenue Service is very specific about which type of back taxes may be discharged.  In October 2005, Congress enacted the Consumer Bankruptcy Law.  Referred to as the "new bankruptcy law", the updated rules make it more difficult for taxpayers to file bankruptcy under Chapter 7 and to discharge tax debt.  If they qualify, taxpayers need to know when they may discharge tax debt through a personal bankruptcy as the rules are very specific. Discharging Tax Debt [...]

Is Bankruptcy a Viable Option to Eliminate Your Taxes?

Part 1 of 3 Most taxpayers are unaware that bankruptcy may be a viable option to discharge income taxes.  Although bankruptcy may work to relieve IRS tax debt, it also has the ability to cause issues.  Nonetheless, people are declaring bankruptcy in record numbers so that they may wipe away their personal debt.  Faced with financial difficulties, they hope that by filing for bankruptcy they will gain a fresh start. In fact, bankruptcy is an option that is used to relieve debt obligations not just by everyday people, but also by some of the world's largest businesses.  Two questions that [...]

Two Billion Dollar IRS Tax Fraud Case Could Be The Biggest Ever

In early January, the IRS is going to court to settle a humongous tax fraud case. Texas tycoon Sam Wyly is set to face off against the Internal Revenue Service at trial over more than $2.2 billion the agency says he owes for using offshore trusts. The offshore trusts resulted in what the Internal Revenue Service is calling one of the largest tax fraud cases in U.S. history. The Tax Resolution Institute understands if your tax problem with the IRS seems tiny in comparison, but it still needs to be handled. Huge IRS Tax Fraud Case Biggest IRS Tax [...]

Court Case Makes IRS Substitute For Return (SFR) Kiss Of Death For Discharging Tax Debts In A Bankruptcy

According to Mallo v. IRS, No. 13-1464 (10th Cir. 2014), a taxpayer can no longer discharge an income taxes liability in a bankruptcy if the IRS filed a Substitute For Return (SFR) for the taxpayer. If an untimely 1040 Form, filed after the Internal Revenue Service (IRS) has assessed the tax liability, is a tax return for purposes of the exceptions to discharge in section 523(a)(1)(B)(i) of the Bankruptcy Code, it is no longer considered valid. Such an update is essential because it implies that if a taxpayer wants to discharge a tax liability in a future bankruptcy, they better first file their [...]

Have Questions About Bankruptcy & Income Tax Debt?

Questions about bankruptcy & income tax debt are more common that you can imagine. Many people have found themselves in financial trouble, particularly after the recent recession. The Tax Resolution Institute is not surprised that such financial trouble goes hand-in-hand with questions about bankruptcy & income tax debt. If you are considering filing for bankruptcy or even if the option is on the table, knowing whether or not you can discharge your IRS income tax debt is a big question to answer. Bankruptcy & Income Tax Debt Bankruptcy & Income Tax Debt Although bankruptcy often can be a [...]

Question About A California Franchise Tax Board Wage Garnishment

Question - My boss told me he received notice about a California Franchise Tax Board wage garnishment and in a couple of pay periods my wages will be garnished by the FTB until my back tax debt is covered.  The California Franchise Tax Board wage garnishment is taking a hefty chunk out of my paycheck and I don't know what to do. A lawyer friend recommended that I file for chapter 7 bankruptcy to stop the wage levy, but this seem awfully extreme. What can I do? California Franchise Tax Board Wage Garnishment Question The Tax Resolution Institute receives questions [...]

In Terms Of A Bankruptcy, U.S. Supreme Court Rules Inherited IRA Cannot Be Excluded As Retirement Funds

Important Bankruptcy Decision On June 12, 2014, the United States Supreme Court ruled in In CLARK et ux. v. RAMEKER, TRUSTEE, et al that funds held in an inherited IRA (Individual Retirement Account) are not retirement funds within the meaning of Section 522(b)(3)(C) of the Bankruptcy Code. As such, these funds are not exempt from the IRA holder’s bankruptcy estate and are subject to the claims of creditors in the proceedings. For tax purposes, the Tax Resolution Institute believes this is an important case in regards to using a bankruptcy as a way to avoid tax resolution issues. [...]

Dischargeability Of Taxes In Bankruptcy Illuminated By Peter Stephan At San Fernando Bar Association Meeting

Peter Stephan On The Dischargeability Of Taxes At a San Fernando Valley Bar Association meeting, Peter Stephan lectured on the dischargeability of taxes with bankruptcy attorney David Tilem to a standing-room only meeting of attorneys and financial professionals. As the founder of the Tax Resolution Institute and a noted expert on IRS procedures and practices, Peter Stephan brought years of expertise and experience to the table. As founder of the Glendale Bankruptcy Bar Association, David Tilem esquire proved to be the perfect proverbial partner-in-crime for Peter Stephan. Together, they took an incredibly complex issue and illuminated it as best [...]