Your Guide to Bankruptcy and Tax Relief
If you live in Georgia and plan to file for bankruptcy or search for tax relief, it can help relieve many forms of debt, such as tax debts that meet particular requirements. A qualified Atlanta tax attorney at the Law Office of Max Benkel can answer all your questions about what the best path to tax freedom may be for you.
FAQs about Bankruptcy and Tax Relief
Will the IRS Discharge my Unpaid Income Taxes if I File Bankruptcy?
That depends on a lot of factors, but with a skilled tax attorney in Georgia it that is likely.
If you find yourself in a position where you can’t pay your federal and state taxes, it’s important to know that not all types of tax debt are dischargeable in bankruptcy. Chapter 7 is the best way to eliminate or manage income tax debt.
What is the means test?
To qualify for Chapter 7 bankruptcy, you will need to pass the means test. The means test makes a comparison of your disposable income with the state median income for your household size.
Congress passed The Bankruptcy Protection Act of 2005 to counteract lenient and inconsistent standards that made it easier for filers to meet qualifications.
Is anyone exempt from the means test?
Yes. There are a number of exceptions in the bankruptcy means test where the debtor’s income is not considered. This includes disabled veterans that took on debt while on active duty or serving in homeland defense activities.
This exclusion applies to military veterans who have a disability rating of at least 30% and more than half of their debt was incurred during time spent on active military duty or service for homeland defense.
Another exception applies if your debts are mostly the result of operating a business. They may file for bankruptcy under Chapter 7.
Can anything prevent me from having my tax debt covered by a Chapter 7 bankruptcy?
Unfortunately, yes. Chapter 7 bankruptcy can help you discharge your income tax debt if you meet these requirements:
- Your tax has to be income tax – Some federal and state taxes are dischargeable, so contact a tax attorney in Atlanta Ga to learn more.
- If you have tax evasion or fraudulent returns as a part of your debt, then it will not be forgiven.
- A tax return was filed for the debt at least two (2) years ago – you might extend this to include late-filed returns, but not any I.R.S.-prepared “substitute for returns.”
- The debt must have been due at least three years before the day the bankruptcy is filed.
- The IRS (or State of Georgia) must have assessed the debt at least 240 days before filing, or you haven’t ever been assessed.
- It is important to note that if you owe both federal and state taxes or state taxes alone, equivalent bankruptcy rules apply to both. So if you’re looking to discharge your federal and state tax debt, call a tax lawyer Atlanta today!
Is there anything I can do if I fail the means test?
Yes – a tax attorney Atlanta GA that specializes in tax law may suggest several options:
If you’re overdue on your taxes, the I.R.S. may be able to work with you and offer an installment agreement, which will allow you to pay off your debt over time.
With the help of a tax lawyer Atlanta, you may be able to make a deal with the I.R.S. so that you can settle your debt for less than what it is owed.
If you’re worried about back taxes and your debts, perhaps it’s time to call a tax relief lawyer Georgia.