Taxes and Bankruptcy: The Nuts and Bolts
by: Richard K. Gustafson, II
The filing and subsequent discharge of either a Chapter 7 or a Chapter 13 bankruptcy may eliminate some types of personal income tax liability. There are, however, certain restrictions which must be met in order to completely eliminate personal income tax liability through bankruptcy.
Some personal income taxes may be eliminated through the filing and subsequent discharge of a Chapter 7 bankruptcy. The following requirements must be met for the personal income tax liability to be eliminated in a Chapter 7 bankruptcy:
? The tax return must have been filed on time
? The filing should not be fraudulent
? The tax return must have been filed over three years ago as of the bankruptcy filing date (e.g. IRS debts for the last three years generally, would not be dischargeable)
? Alternatively, in some cases, if the tax return was filed late, was not fraudulent and was filed over two years ago as of the date of the bankruptcy filing, the tax debt may be deemed dischargeable. For example, if you filed your 1986 tax returns in 1990, and in 1994 filed a Chapter 7 Bankruptcy, this tax debt would be dischargeable as long as it was not related to a fraudulent filing and the tax debt was assessed by the IRS over 240 days before the bankruptcy filing.
Even if all of the above requirements are met, personal income taxes can still sometimes be non-dischargeable in a Chapter 7 bankruptcy. This occurs when the IRS has placed a tax lien on the debtor's property. In this case, the tax liability must be paid in full, but the IRS may be forced to accept a payment plan or substantially eliminate penalties through the filing of a Chapter 13 bankruptcy.
In a Chapter 13 bankruptcy, the debtor makes payments to a bankruptcy trustee and the bankruptcy trustee in turn distributes a percentage of the payment to the creditors. A Chapter 13 plan is filed with the court which determines the amount distributed to each creditor by the trustee. A bankruptcy judge can force the IRS to accept extended payments on personal income tax liability through a Chapter 13 plan.
This type of bankruptcy works well when the IRS has a tax lien on personal property and the debtor has enough income to pay back the IRS over a three to five year period. Tax penalties may be discharged in a Chapter 13 bankruptcy because they are lumped in with all the other unsecured creditors of the debtor, such as credit cards. These are generally only paid back through the bankruptcy at 10% or ten cents on the dollar.
Filing either a Chapter 7 or a Chapter 13 bankruptcy may be a useful tool for debtors to eliminate tax liability.
About The Author
Richard K. Gustafson, II is a partner with Legal Helpers and specializes in consumer bankruptcy law. www.legalhelpers.com, the law firm of Macey & Aleman, is one of the nation's largest consumer bankruptcy firms. Founded in 1994, Legal Helpers have helped over 75,000 clients eliminate over $500,000,000.00 in debt. Legal Helpers can be contacted by phone, 888-743-5787 or by email, info@LegalHelpers.com.
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A Publisher?s Rant ? Why I Hate Your Byline
A Publisher?s Rant ? Why I Hate Your Byline
by: Halstatt Pires
I?m a publisher for numerous sites. I HATE many of your articles. Here?s why I hate the byline of your article and what you can do about it.
Bylines
The byline of an article is your chance to pimp your site and yourself. I don?t really care what you write. There only time I would forgo using an article because of the byline would be if you?re one of those people that writes seven or eight lines of text. Please try to keep it to three lines or less.
Something To Consider
If you?re writing articles, you undoubtedly know it is a great way to build the link count for a site. Assume you put two links in the byline of an article. Assume further that 60 sites publish your article. You have effectively generated 120 links for your site, a number that would take forever if you were pursuing reciprocal link trades.
Article links are also valued highly by search engines...
A Publisher?s Rant ? Why I Hate Your Byline
Tax help > A Publisher?s Rant ? Why I Hate Your Byline
Helpful Tax Tips For Federal And State Tax Returns
Helpful Tax Tips For Federal And State Tax Returns
by: Gray Rollins
Each year there are millions of Americans who prepare their own federal and state tax returns and even more individuals have their taxes professionally prepared. Whatever choice a taxpayer makes there are a number of important tax tips that everyone should know.
A W-2 or 1099MISC is needed to accurately prepare a federal or state income tax return. There is always a chance that a taxpayer may misplace these forms or for one reason or another the forms may not have reached them. For federal tax returns and most state tax returns a W-2 or a 1099MISC is required. Individuals who do not attach these items are likely to prevent their tax returns from being processed or cause a refund delay. The Internal Revenue Service (IRS) states that all taxpayer should receive their W-2 or 1099MISC forms before February 15th. Individuals who did not receive these items are encourage to contact...
Helpful Tax Tips For Federal And State Tax Returns
Tax help > Helpful Tax Tips For Federal And State Tax Returns
The Umbrella Effect of The Bankruptcy Stay
The Umbrella Effect of The Bankruptcy Stay
by: Victoria Ring
Updated to comply with new BAPCAP (advanced training for bankruptcy paralegals)
The following article is for training purposes only. It is not intended for legal advice.
Regardless of whether an entire petition or a skeleton petition is filed, the very moment the bankruptcy petition is filed with the bankruptcy court, a type of
umbrella for the debtor(s) is put into effect. This is called the bankruptcy stay which helps some common emergencies:
** Utility disconnections. If the debtor(s) are behind on a utility bill and the utility company is threatening to disconnect their water, electric, gas, or telephone service, the automatic stay will prevent the disconnection for at least 20 days. (Also, bankruptcy will probably discharge the past due debts for utility service.)
** Foreclosure. If the debtor(s) home mortgage is being foreclosed on, the automatic stay...
The Umbrella Effect of The Bankruptcy Stay
Tax help > The Umbrella Effect of The Bankruptcy Stay
Compromising With The IRS
Compromising With The IRS
by: Frank Hague
Few things threaten your well-being like the harassment and anxiety of persistent tax problems. Most people make 3 mistakes that get them in trouble with the IRS. They procrastinate. They attempt to represent themselves. They hire sub-par representation and now are in MORE need of help than ever before.
These are the kind of services a Tax Attorney can provide: Offer in Compromise Cases, Penalty Abatement Petitions, Full Audit Representations Business Strategy Sessions. Preparation and Filing of Tax Returns.
Settle taxes for Pennies on the Dollar owed, Stop IRS wage and bank levies (garnishments), Have property liens lifted, get affordable installment agreements, File bankruptcy against the IRS, Have penalties and interest forgiven, Reduce taxes by running out the IRS' time to collect.
Offer in Compromise: Settle your taxes for Pennies on the Dollar owed Professional law offices can help...
Compromising With The IRS
Tax help > Compromising With The IRS
How IRAs work
How IRAs work
by: John Mussi
Are you taking advantage of individual retirement account (IRA) opportunities? IRAs can be frustrating because of the different forms and reports, difficult or confusing IRA rules. Successful retirement planning usually means coordinating personal savings with benefits from an employer's retirement plan and social security. However, in the last 30 years, retirement planning has changed, putting more emphasis on personal saving through retirement plans at work and through IRAs.
IRA Owner Benefits
As additional incentives to save, IRAs provide current tax benefits, such as:
Tax-deductible contributions to eligible individuals of traditional IRAs (since 1975)
Nontaxable distributions from Roth IRAs (starting in 1998) are found to be a more attractive alternative by many individuals who are ineligible for traditional IRA deductions
Income tax deferral on IRA earnings enjoyed by both traditional...
How IRAs work
Tax help > How IRAs work
What is a Structured Settlement
What is a Structured Settlement
by: Amit Laufer
A Structured Settlement is an agreement between a personal injury victim ( a Plaintiff ) and an Insurance company ( the Defendant ) to compensate the Plaintiff by the defendant with long term periodic payments instead of a single cash lump sum.
Payments can be tailored to each individual plaintiffs needs, to help meet expenses such as on-going medical and living expenses, education, children needs & support etc? The fixed annuity payments are tax-free to the claimant, a cost-of-living adjustment (COLA) feature is available, that can help offset the effects of inflation over time, payments can continue as long as the claimant lives thus providing him the maximum benefits.
Structured settlements are encouraged by plaintiffs lawyers, Courts, Insurance companies and the legislators alike as they all agree it is the best solution to all parties involved especially for the claimant.
...
Tax help > What is a Structured Settlement