Tax/IRS Trouble
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Taxpayers with overdue taxes should
consider the benefits of a Chapter 13 bankruptcy: ·
It’s a realistic payment schedule. Payment of tax debts through the plan is based on financial reality:
Monthly payments reflect what is actually available in your budget after
current living expenses ·
Old taxes and all penalties are forgiven. Taxes more than three years old and all tax
penalties are treated the same as other unsecured debts and may be paid
pennies on the dollar. ·
Unfiled taxes are forgiven.
You can get back into the tax system at the price of paying only the three
most recent years’ taxes and don’t have to worry about all those years you
didn’t file tax returns. ·
Tax liens are frozen.
The value of a tax lien claim is limited to the value of your property at the
time you filed for bankruptcy. ·
You can avoid other creditors.
Other creditors can’t collect on debts while you’re making payments on the
plan, so your cash flow for payments into the plan is protected. ·
Avoidance of debts is unconditional. All tax debt from before you filed for bankruptcy is wiped out at
the completion of the case. Unlike “offer in compromise” deals you might try
to work directly with the IRS, there are no conditions or strings tied to
future tax filing. ·
It’s quick. Plans
are approved within a few months of filing, giving you fast action on the
terms of the plan. Attorney’s fees for Chapter 13 bankruptcy start at $1300,
and are payable in part from the payments you make to plan. ·
Bankruptcy shouldn't be your first choice if you’re behind on your taxes, but it may offer significant
advantages over installment plans and deals with the IRS if you have tax
troubles. |
Produce label recalls the
Boston Tea Party, a tax protest |
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“The
power to tax is not the power to destroy while this court sits” -Oliver Wendell Holmes, Supreme Court Justice |
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(information is in Adobe
.pdf format)
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