Federal tax law allows an individual debtor in bankruptcy to cut off their tax year as of the date before filing a Chapter 7 or Chapter 11 bankruptcy if there are assets in the bankruptcy estate. As I discussed in a prior article, the election, allowed by 11 USC §1398, must be made by the [...]

Sometimes one tax year in a 12 month period is just not enough!  Think of all the fun that could be had if there were two.  When it comes to bankruptcy, Congress agreed with that principal.  An individual is allowed to split the tax year into two short years in certain types of bankruptcy proceedings.  Internal [...]

The US Treasury is limited to 10 Years for the collection of tax once the tax has been assessed and becomes collectable.  For technical details about this limitation on federal tax collection see my article “How Long Can The IRS Collect From Me?” on our sister website Debt Law Network.  As I indicated in that [...]

People in money trouble too often put off filing tax returns, which is a problem if they want a fresh start through bankruptcy. Taxes for which no returns have been filed are not dischargeable in bankruptcy. In Chapter 13, the debtor is required to get all unfiled returns on file before the plan [...]

There are a number of debts that will survive a bankruptcy filing, whether Chapter 7 or Chapter 13 is filed.

Child support or alimony are priority debts and those debts survive bankruptcy.

Debts owed to the government, whether taxes, fines or restitution–Some taxes owed before filing are discharged; others are not.   The rules for determining which kinds [...]

If people file for bankruptcy before the receipt of the stimulus rebates, they may be taken by the bankruptcy courts and used to pay a pennies on the dollar towards general unsecured debts like credit cards. For people filing for bankruptcy before the rebate checks are received, they may not have a choice [...]

         The tax stimulus law went into effect on February 13, 2008 when it was signed by President Bush.  The law gives a rebate to all taxpayers who file returns for 2007 and who made $3,000 or more.  It gives a rebate of $600 to the filer, $600 to the filer’s spouse [...]

My office has been flooded this week with clients with failed offers in compromise for IRS tax debt. Like most clients, they have been clinging to the hope that there was a solution other than bankruptcy.
The comparison of OIC vs. bankruptcy is neatly laid out in an article by Larry Heinkel in the Florida [...]

You can try.  You will be held personally liable for some of your LLC’s tax debts.  Examples include sales tax, and the trust fund portion of employee withholding taxes.  If you file a personal Chapter 13 (an LLC cannot file a Chapter 13), you can put your personal liability for the LLC’s taxes into your [...]

Why should your tax returns be affected if your spouse files a bankruptcy?  If you file a separate tax return from your spouse, there should be no effect at all.  If you file a joint tax return, however, you should be aware of the following:
1.  Your last (if joint) tax return must be sent to [...]