The Tax Law Office of Jeffrey Anton Collins takes on some of the most serious tax cases with IRS collection and tax reduction in bankruptcy. We handle those difficult, sensitive cases that require specialized attention and knowledge of your business in order to address your IRS problems. We understand the need of privacy of your matters among the public, your employees, and your professional contacts. We make certain to protect your reputation and relationships.

Tax Preparers, business owners, and those owing income tax should know about the option of discharging taxes in bankruptcy.

Here is the common question: Is it possible to include tax liability for discharge in a bankruptcy. The quick answer is – yes, quite often. This area is very technical and case-specific, but has benefitted a great many of our clients.

For referring CPA’s and tax professionals, exploring this option can be the most progressive advice you can provide your tax client. Still, we respect your role of primary tax advisor to your client. We work together with you, to provide a solid solution. Attorney Collins will include you through every step of the process with your tax client. By providing competent, specialized legal services to your client, we can advocate for taxpayers in Downers Grove, Lisle, and Naperville IL, as well as anywhere in the United States and its territories.

Our services are affordable, and we offer payment options to help you get the right help. We understand life’s unexpected situations, and we can relate to yours. We will always treat you with respect.

Some of the Rules

Under Title 11 U.S. Code, Sections 523 and 507, the U.S. Bankruptcy Code identifies in what cases income taxes are dischargeable. Criminal tax attorney Jeffrey Anton Collins has outlined few sets of rules to help guide tax-owing people exploring relief in bankruptcy.

Tax professionals should also take note:

Only income taxes are dischargeable. Income taxes may include federal, state, or even local (city) income taxes. Income taxes do not include property taxes, payroll taxes, sales taxes or excise taxes. However, property taxes are usually treated as if they were discharged, due to their special connection with the underlying real estate.

Related to income taxes, only that tax liability which resulted from income tax returns that were actually originally filed by the tax payer, are dischargeable.

Since only that tax liability which resulted from returns filed by the tax payer is dischargeable, the timing rules center mostly on tax returns. The tax return due date must have been 3 years prior to filing the bankruptcy case. The return itself must have been filed at least 2 years prior to the bankruptcy being filed.

Additionally, any tax liability including any additional assessment of liability, say for an audit or other adjustment, must have occurred at least 240 days (which is about 8 months) prior to filing the bankruptcy. However, when considering those timing rules, keep in mind that certain legal actions may temporarily stop the running of those timing rules. These legal actions may very well include the filing of a prior bankruptcy case, or some other action that causes a collection deferment with the IRS. These cases could temporarily stop, or Toll, the running of those timing rules for a limited period of time.

The last common set of rules for achieving tax relief through bankruptcy is based upon a simple premise. Secured liability will stay protected by the securing asset. Put another way, tax liability protected by a Federal Tax Lien is often not discharged in bankruptcy, if there are assets securing the tax liability.

Another question: Does that mean if a federal tax lien or even a state tax lien has been filed, then the tax is secured and not discharged in bankruptcy?

In some cases, secured tax liability can be made unsecured, and therefore dischargeable in bankruptcy. However, because of the substantial legal consequences associated with handling this process incorrectly, you should only seek a bankruptcy attorney that specializes in discharge of taxes in bankruptcy before moving forward. Tax liens are more than tricky. They are enduring.

Even with the general rules, there are certain other specific rules that apply on a case by case basis. Discharge of tax liability is extremely technical and, again, these cases are fact specific to your particular situation. Using these general rules as a basis, speak only with a specialist attorney that handles discharge of taxes.

Taxpayer advocate Jeffrey Anton Collins can provide solutions utilizing our nation’s bankruptcy laws. What has been the case with so many of our clients, discharge in bankruptcy may very well be an option. If faced with a back-tax situation exceeding $100,000, a bankruptcy option may just provide a fresh start for you, your family, or your business. Any individual or business owner with such a large IRS tax liability should not ignore this option.