Filing Chapter 7 bankruptcy on the IRS? A step by step guide to getting it done

Chapter 7 bankruptcy is a powerful tool when facing the IRS – it can eliminate an entire tax liability if properly done. 
To help with your understanding of how a Chapter 7 bankruptcy can help you end an IRS problem, here is a step by step guide.  Hopefully, it will make the process a  little less intimidating.
Step 1.     Have you filed [...]

IRS problems and have credit card debt? Tips for handling both

I received a call today from an enrolled agent for my help with a client who was having problems not only with the IRS, but credit cards as well.  As usual, my enrolled agent friend got it right – bankruptcy was likely on the horizon for us to take care of both problems simultaneously.
Two basic rules on owing the [...]

What is the impact of successive bankruptcies on the tax discharge timing rules?

A great question from a reader about discharging taxes when \ successive bankruptcies are filed:
Mr. Levy – I hope you can help me.  I owe back taxes and filed a Chapter 13 to repay the IRS.  The Chapter 13 was dismissed because I could not keep up with the payments.  Now I would like to file a Chapter 7 to eliminate [...]

Does bankruptcy stop IRS audits?

Bankruptcy is a powerful tool in solving IRS problems – but can it stop the IRS from auditing you?
A centerpiece of bankruptcy law is the concept of an “automatic stay.”    The automatic stay stops creditors from calling and writing to enforce or collect a debt from you.  The “stay” on your creditors – including the IRS – [...]

Real example: When can my taxes be discharged in bankruptcy?

I do alot of IRS and bankruptcy work for my clients, and receive many questions about  it works.  Bankruptcy is a valuable tool to eliminate IRS liabilities.
To help in understanding taxes and bankruptcy, I thought it would be helpful to provide real life examples, starting here with a “bankruptcy timing” question I recieved from an enrolled agent [...]

I owe back taxes to the IRS. Now what? Part I of II

Every IRS problem has a solution.  Some solutions are quick.  Other workouts require more creativity, planning and patience.  When meeting with a client  - or during an initial telephone consultation – I like to discuss the following options and how each might fit in towards the ultimate goal of a fresh start:
1.   Offer [...]

Who do you pay first – IRS debt vs. credit cards?

It is not unusual for my clients to find themselves indebted to two masters – the IRS and credit card companies.  Both want a piece of the pie, but there is not enough to go around.  So who do you pay first? How do you make both go away?
The IRS comes first.  Here’s why:
1.   [...]

Bankruptcy as leverage in an offer in compromise

On more than one occasion I have used the possibility of bankruptcy as leverage in reducing the value of a offer in compromise.  The possibility of bankruptcy can have a big impact on an IRS compromise. 
Here’s why:
1.     A Chapter 7 bankruptcy can “discharge” a tax liability.  
2.     Any taxes that could be discharged by a potential [...]

Can I make the IRS an offer to pay tax only?

I received this question about using an offer in compromise on interest and penalties:
I owe $25,000 in tax, but the interest and penalties have made the amount I owe almost double.  Won’t the IRS be happy just to get the principal I owe back and forgive the interest and penalties?
In an offer in compromise, the [...]

Tough economy + aggressive IRS = tax bankruptcy.

All recent indications are that the IRS is plowing ahead in its collection efforts under a weakening economy.  Revenue Officers continue to push hard, and there are no signs that Automated Collection Service has backed off its levy and lien filings.
The unfortunate result of this pressure is that more and more clients are turning to a [...]

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