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. [...]

IRS Considerations In Internal Revenue Manual On Accepting Offers In Compromise When A Bankruptcy To Discharge The Income Tax Debts Is Possibility

In the Internal Revenue Manual, there are specific IRS Internal Considerations that IRS employees are supposed to know and follow. This is a TRI Update for anyone considering filing for bankruptcy if there Offer In Compromise is not accepted by the IRS. If you are wondering what considerations the IRS officially takes into account in such a situation, please examine the information below from the Internal Revenue Manual. The Internal Revenue Manual & IRS Consideration IRS Internal Revenue Manual The Internal Revenue Manual (IRM) sets forth the policies, procedures, instructions, guidelines, and delegations of authority which control the [...]

“Who is Eligible for an Offer in Compromise?”: Peter Stephan and Jim Felton, The Tax Team Explains

Who is Eligible for an Offer in Compromise? Brian Whitman: That's Jim Felton from Greenberg & Bass, and Peter Stephan here from the Tax Resolution Institute. I'm going to ask what I think is a dumb question. So I'm just going to say that so you don't think I'm dumb. I'm just going to tell you, I think I'm going to ask a dumb question. Everybody is not eligible for an offer in compromise, correct? Jim Felton: That's correct. Brian: Okay, so that's not a dumb question is it? Jim: No, not at all. Not at all. Brian: Okay. Jim: [...]

3 Time Period Conditions You Must Meet To Discharge IRS Income Tax Debts In A Chapter 7 Bankruptcy

If you want to discharge IRS income tax debts in a Chapter 7 bankruptcy and your tax returns filed were not fraudulent in nature, there are one of three conditions that you need to meet. In order to discharge IRS income tax debts, the IRS requires a reasonable amount of time to collect the taxes. Federal tax laws and bankruptcy statutes define such time periods. The Tax Resolution Institute can guide you to make sure that your IRS tax debts are dischargeable in a Chapter 7 bankruptcy. How much of an opportunity does the IRS have to collect [...]

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 [...]