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 [...]

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 [...]

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. [...]

The Bankruptcy Of Casey Anthony Reveals Delinquent Income Tax Debts

  Her Delinquent Income Tax Debts When Casey Anthony fails to pay her taxes and has delinquent income tax debts, the Internal Revenue Service comes knocking at her door. If her life was not already a train wreck, things have gotten worse for Casey Anthony, the Florida woman who was acquitted of killing her 2-year-old daughter Caylee in 2011. According to papers filed in her bankruptcy hearing, Casey Anthony owes the Internal Revenue Service $68,540 in delinquent income taxes, interest and penalties. The real question is whether her delinquent income tax debts are dischargeable through bankruptcy. The Tax [...]

Are Retail Sales Taxes “Excise” or “Trust Fund” Taxes under the Bankruptcy Code? What is Your Opinion?

Last month the United States Court of Appeals, Third Circuit considered for the first time whether retail sales taxes are “excise” taxes or “trust fund” taxes under the Bankruptcy Code. The distinction is significant because trust fund taxes are never dischargeable in bankruptcy. The decision by the Third Circuit reflected the decisions of the two previous Appeals Courts that in terms of a taxation purposes, a retail sales tax should be viewed as a Trust Fund that a retailer is holding for that state. Do you agree with the decision or do you disagree? Appellant Michael Calabrese operated “Don's What [...]