When a taxpayer is facing the threat of enforced IRS collection proceedings, another alternative is to file a bankruptcy petition. As a general rule, all tax claims except priority taxes are dischargeable, depending on the circumstances of each case.
Based in Bellevue and serving Washington State and Seattle, attorney Olga Guzhva has helped many clients determine if bankruptcy is a good option for them. To consult with us about our tax attorney services and whether they are right for you, we welcome you to contact Guzhva Law Firm to schedule a free phone evaluation.
Taxes are frequently one of the major debts of individuals and businesses. For a taxpayer whose total liabilities substantially exceed the taxpayer’s assets and whose tax liability is presently dischargeable, a bankruptcy petition may present a valuable option.
The filing of a bankruptcy petition can result in the elimination or reduction of large amounts of tax debt, since the ultimate goal of all bankruptcies is a “fresh start” for the taxpayer. Bankruptcy is also an effective technique to deal with an uncooperative Revenue Officer, and it can substitute for an Offer in Compromise.
To understand how bankruptcy works, you should be familiar with its key terms and concepts.
Correct timing of your bankruptcy petition filing will give you an opportunity to decide on a strategy in dealing with your financial situation. Obtaining a bankruptcy discharge is often a waiting game, involving stringent compliance with multiple timing rules.
The Bankruptcy Court and the Tax Court have concurrent jurisdiction to determine the debtor’s tax liability, but the Bankruptcy Court usually decides which court will hear the case.
NOTE: Any tax return due date (including any extensions) arising before the bankruptcy petition filing date, is nondischargeable under “the three-year rule.”
At Guzhva Law Firm, we are providing thoughtful solutions and measurable value to each individual situation. Because U.S. tax law and regulations are complicated and constantly changing, it is important that you obtain up to date information about the provisions that apply to you to prevent costly mistakes.
Because the IRS enforced collection procedures can seriously disrupt the taxpayer’s business and employment relationships and jeopardize the taxpayer’s credit rating, it is important for the taxpayer to consider this alternative carefully before deciding it is best.
Like bankruptcy, other alternative methods of tax repayment also apply to taxpayer who is experiencing financial hardships that make it difficult to pay their taxes. In deciding which approach to take, much will depend on the individual facts of the particular case, with certain comparisons that can be made by our tax attorney.
To schedule a consultation with a tax attorney, please contact us today. With offices in Bellevue, we work with tax clients throughout Seattle and Washington State, and elsewhere.