Centennial Tax Consolidation Attorney
Comprehensive Legal Guidance in Aurora
Many mistakenly believe that bankruptcy cannot provide any relief for tax liability. While discharging tax liabilities through bankruptcy is not always straightforward, obligations owed to the Internal Revenue Service (IRS) and Colorado Department of Revenue can in some situations be reduced or entirely forgiven through filing.
Our Centennial tax consolidation lawyer at Norton Law, P.C. can help you leverage bankruptcy to address these liabilities. We have over 15 years of legal experience and can work with you to determine if your tax liability may be eligible for discharge. Even if tax liability cannot be directly forgiven, we can help implement other strategies that can work to reduce your obligations and provide relief for other debts.
“Norton Law will treat you with respect and advise on the best course of action.” - Larry L.
“I really appreciate the knowledge, professionalism, and sincerity of Norton Law. April and Dori have really helped make this experience of going through bankruptcy a lot more bearable.” - Shelly C.
“The entire process went smoothly thanks to April’s knowledge and professionalism.” - Jeni W.
How Chapter 13 Bankruptcy Can Help Manage Tax Liability
If your tax liabilities do not qualify for discharge or if you are not eligible to file for Chapter 7 bankruptcy, other relief options are available. Chapter 13 bankruptcy can give you the time, resources, and flexibility you need to address many of your financial obligations.
Chapter 13 bankruptcy involves submitting a reorganization plan. All of your outstanding debts and liabilities will be addressed through a single payment that must be made monthly for 3 to 5 years. The amount of this monthly payment is tied to your current disposable income, not the size of your debt. You can typically discharge all remaining unsecured debts once you have completed your repayment plan.
Older tax liabilities may be able to be discharged through Chapter 13 bankruptcy if you have an especially low level of disposable income. In these situations, dischargeable tax liabilities will not accrue interest or penalties while your Chapter 13 case is active. Non-dischargeable tax liabilities can still be addressed as part of the repayment plan, and discharging other unsecured debts can provide you with the funds necessary to bring your tax obligations current.
Depending on your unique circumstances, a plan combining bankruptcy with an offer-in-compromise or settlement may provide the best results. Our Centennial tax consolidation attorney at Norton Law, P.C. can help you explore all available relief options. We understand the stress and uncertainty that comes with owing money to the IRS or state taxing authorities and are committed to helping you secure the relief you need.
How Chapter 7 Bankruptcy Can Discharge Tax Liability
Completing a Chapter 7 bankruptcy can in some cases allow you to discharge qualifying tax liability. However, you must be eligible to file for Chapter 7 bankruptcy, which means you must meet certain gross income and disposable income requirements. Your tax liability must also meet certain requirements.
To discharge tax liability through Chapter 7 bankruptcy, the following must be true:
- The tax liability must be at least 3 years old
- The taxes must be income taxes
- You must have filed an on-time tax return for the tax liability you wish to discharge
- You must not have committed any fraud or deliberate evasion
- You must pass the 240-day rule, which means the IRS must have assessed your income taxes a minimum of 240 days before you file for bankruptcy (or not at all)
In other words, you can only have income tax-related liabilities forgiven through bankruptcy. These liabilities must also be at least 3 years old, meaning more recent tax liabilities will not be eligible. Any liabilities attributable to other factors, including audits, will generally survive a Chapter 7 bankruptcy.
Our firm can review your situation and determine if your tax liabilities may be able to be discharged. We can then guide you through each step of the Chapter 7 bankruptcy process.
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