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 [...]

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 [...]

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 [...]

“Unresolved Tax Issues? Unfiled Returns?” Answers from Peter Stephan and Jim Felton, the Tax Team

Unresolved Tax Issues? Unfiled Returns? Brian Whitman: This is the Tax Show, with Peter Stephan from the Tax Resolution Institute. I'm Brian Whitman here every Sunday afternoon at this time. Peter, question for you: I was talking to somebody recently, and they were dealing with an unresolved tax issue. One of the...I think it's a great question...people move. I mean, people move from state to state. People lose paperwork. People don't have documents. And then you're looking at four years, five years of un-filed returns, and people say, I don't even know where to begin in terms of the paperwork. [...]

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 [...]