One of the most financially and emotionally overwhelming debts a person can have is that of back taxes owed to the Internal Revenue Service (IRS). In some cases tax debts can be resolved through compromise or an installment plan agreement with the IRS. In other cases, particularly where you have other substantial debt in addition to delinquent taxes, bankruptcy may be your best solution for tax debt relief in Central Florida. Our Orlando debt relief attorneys at Tudhope Law are seasoned negotiators and we have helped many Orlando residents settle delinquent tax issues through mediated agreements.
Tax debt relief through bankruptcy is complicated and the circumstances vary in each individual case. With the help of an experienced debt relief attorney it is possible to negotiate an offer of compromise or repayment plan. However when negotiations aren’t possible or feasible, bankruptcy may offer significant advantages over an installment agreement proposed by the IRS.
Orlando residents facing back taxes problems may have a couple bankruptcy options: Chapter 7 and Chapter 13 bankruptcy. In order to discharge tax debts in a Chapter 7 bankruptcy, the taxes owed must be income-based (not fraud penalties or payroll taxes). You must show that your debt is at least three years old and that you filed a tax return for that debt two years before your bankruptcy filing. Other conditions include a genuine inability to pay your taxes and that you did not commit willful tax evasion or fraud. The IRS must also have assessed you within the previous 240 days for overdue taxes or the taxes must not have been assessed yet; and you must qualify for Chapter 7 bankruptcy under the Means Test.
Tax delinquencies that are not eligible for discharge in a Chapter 7 bankruptcy may still be eligible for repayment without interest or penalties in a Chapter 13 bankruptcy. One advantage to paying delinquent taxes through a Chapter 13 plan rather than an IRS repayment plan is that in Chapter 13 your monthly payments are made based on your financial situation after the deduction of living expenses. Furthermore, during bankruptcy the automatic stay prevents creditors from collecting on other debts so your income is protected and can be directed into your payment plan.
Tax liens that are recorded before you file for bankruptcy are subject to special rules. Once the IRS has filed a notice of federal tax lien, the delinquent tax debt associated with the lien attaches to any assets you own at that time and anything new acquired as long as the lien is in effect. Tax liens, therefore, may remain on real estate and other assets owned prior to the bankruptcy until time limit for collection expires or the tax debt is cleared.
The tax debt relief attorneys at Tudhope Law understand the stresses associated with past due taxes and we can help you obtain the time needed to repay or discharge back taxes and other debts. To schedule an appointment for a free initial consultation to discuss your questions regarding delinquent taxes or tax liens, contact us today at (407) 969-0044. We can help you to determine your best course of action for creating a workable and permanent solution to achieving tax debt relief.
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