If you go behind on your taxes, it may be a big burden to bear. You may find yourself fighting to keep up with the financial burden that your past taxes have placed on you in the first place. With the assistance of a bankruptcy lawyer, you may be able to avoid or minimize some types of tax liabilities. Here’s how to do it. Remember to contact The Law Offices of Paul Y. Lee at 888-748-0025 when you are ready for a free bankruptcy consultation.
Insolvency and the Discharge of Income Tax Debts
State and federal income tax obligations are the most straightforward kind of tax bills to clear up and get rid of. For those who qualify for Chapter 7 bankruptcy, you may be able to discharge back income taxes owed from a tax return that was due at least three years ago, as long as you filed that tax return at least two years ago and met all of the other conditions for Chapter 7.
Bring copies of your tax papers with you when you meet with your bankruptcy attorney so that they may correctly analyze your eligibility for discharging income tax bills through Chapter 7 bankruptcy.
Taking Care of Your Other Tax Debts
A little more difficult is obtaining relief from tax bills that are not connected to one’s income or earnings. Although you will not be able to entirely discharge these taxes, you will be able to put a halt to IRS collection attempts if you file for Chapter 13 bankruptcy.
Chapter 13 bankruptcy permits a court to design a consolidated payment plan for you to follow in repaying all of your obligations over a three- to five-year period, depending on your circumstances. During this time period, the Internal Revenue Service will not be allowed to levy any further interest costs or penalties on your unpaid taxes. They will also be unable to carry out operations such as wage garnishment or property seizure until the suspension is lifted.
Taxes on Real Estate
While you will not be able to discharge property taxes that were incurred within a year of your bankruptcy filing, earlier property taxes may be eligible for discharging under certain circumstances. In most counties, however, doing so would result in a lien being placed on your property the next time your property taxes are due. If you ever decide to sell your property, you will be responsible for paying this debt.
A bankruptcy attorney can provide you with further information on property taxes as well as address any other tax issues you may have regarding bankruptcy. Call The Law Offices of Paul Y. Lee at 888-748-0025 to get started.