Bankruptcy Taxes Relief Sometimes Allowable
Author: MIKE SELVON
The majority of tax professionals in the United States, as well as most US taxpayers, would say that Federal income taxes are not allowed to be discharged through filing for brokeness. However, this is an incorrect belief and should be placed in the category of myth. The fact of the matter is, there are certain conditions that do allow people to receive bankruptcy taxes relief at the time that they file bankrupt.
Gaining tax through bankruptcy proceedings is a complicated matter, and undoubtedly this is one reason that there is a great deal of confusion regarding this issue. If you are in a situation where you have Federal back tax issues that are due, then it is even more important to get professional help with bankruptcy, as the tax issue complicates the process even more than in a normal bankruptcy case.
There must be great care taken in the process of filing for brokeness, to be certain that all the details are properly handled, especially when any type of taxes are to be included among the debts.
Finding the middle ground amid the maze of US Federal Bankruptcy codes, the code of the Internal Revenue Service, the lien and levy rights of the IRS and the protections for the taxpayer, is very complex. But in some situations, bankruptcy taxes relief can be the best way to resolve a serious tax issue, plus debt, and to put a stop to the intense collection activities of the IRS.
Filing for taxes relief though either a Chapter 13 or a Chapter 7 one will cause an automatic stay to be issued. This will effectively stop all collection activities. This includes stopping bank account levying and garnishing of wages by the IRS and other creditors as well.
Once the stay is issued, the taxpayer and their attorney have some breathing room and time to decide how to best proceed. They can either attempt to get a discharge of the tax debt under a Chapter 7 filing, or they can reorganize the tax obligation by filing Chapter 13 bankruptcy. Which Chapter is filed will depend on a number of factors, including the total amount of all the debts that are owed, the assets of the debtor and the expected future income and ability to pay under a Chapter 13 reorganization.
In 2005, the US Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). This act made a number of reforms to the Federal Code governing filing for brokeness. One of these changes was a merging of the discharge rules that applied under a Chapter 7, a Chapter 11, and a Chapter 13 bankruptcy.
The best advice is to seek good help if you need to seek bankruptcy taxes relief because of how complex the issue is. There is no blanket approach to dealing with taxes through filing for brokeness, but each case is taken on an individual basis and the circumstances of the individual are taken into account as well. As a general statement, it can be said that in most cases older tax debts can be discharged, but newer tax obligations tend to be treated much like property taxes and cannot be discharged.
Article Source: http://www.articlesbase.com/finance-articles/bankruptcy-taxes-relief-sometimes-allowable-291321.html
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Does anyone know where I can find the exemption codes to use in filing bankruptcy?
I wanted to find out if there is a exemption for life insurance policies.
I live in N.C.
What is the bankruptcy law or code in Missouri to exempt my 2007 Tax Refund?
The bankruptcy trustee told me to ammend my exemption schedule to include my 2007 return, but I don’t know the code.
I filed with out an attorney, so I have to find the code by myself.
When the revised “bailout” bill returns for another vote, will it include the unjust enrichment exemption? ?
See page 9 of the PDF version of the bill
http://www.house.gov/apps/list/press/financialsvcs_dem/amend_001_xml.pdf
“(e) PREVENTING UNJUST ENRICHMENT–In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section, including by preventing a sale of a troubled asset to the Secretary AT A HIGHER PRICE THAN WHAT THE SELLER PAID TO PURCHASE THE ASSET. This subsection DOES NOT APPLY TO troubled assets acquired in a merger or acquisition , or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.”
(capitalization added for emphasis)
This means, for example, that the toxic (worthless) assets formerly owned by Wachovia but now owned by Citibank as a result of Citibank’s acquisition of Wachovia can be sold by Citibank to you, the taxpayer, at full price and not at the fire sale price paid for those assets by Citibank. Citibank makes an INSTANT profit. Citibank only paid only $2.1 billion to acquire the banking operations of Wachovia
http://ap.google.com/article/ALeqM5jBpTstzcj2LSvdE72t247CeMqW6QD93GK7K00
and it stands to gain much more than that in instant profits because of this loophole. This is not “bailout” – this is “raiding the treasury”.
Of course some may argue that if Wachovia had not required rescue, we would be purchasing the same toxic assets at full price. So what? Why should Citibank, and not the taxpayer, be the benefactor of that change in circumstances.
That loophole would allow key players like Citigroup to UNJUST ENRICHMENT by acquiring many of the smaller banks now poised for collapse. The result would be that ALL of the toxic assets held by all of those banks would be purchased by the industry at fire sale prices and sold to the taxpayers at full price – with Citibank instantly pocketing the difference.
That also means an instant profit for foreign investors of the institution making the acquisition (Chinese, Saudi, Kuwaiti wealthy business people).
Is this acceptable to you? Do you think the politicians and the media will attempt to slide this one by the people a second time?
Mr. P. I have a sinking feeling that your description “organized crime” may be the best description for the situation at hand. Provisions like this one do not find their way into legislation because of incompetence. They are placed there intentionally.
Oft Suspended. Thanks for the answer. How is it in any way penalizing the acquiring institution to allow them to offload the toxic assets on the tax payer at the same price they paid for them? The acquiring institution is already gaining by purchasing the failing institution at fire sale prices. Are you saying the taxpayer should kick in a windfall profit to induce these acquisitions?
Question about exemptions to a chapter 7 bankruptcy?
I was involved in a car accident back in February of this month in which someone else hit me. After going through the steps of a car accident I found out that the other driver did not have insurance and the liability insurance I carried did not include uninsured motorist. After a long drawn out process I took the other driver to court in which the judge granted me $2020.00 for the vehicle along with the tow bill. Since the court date I have been notified that the woman that hit me has filed for a chapter 7 bankruptcy.
I am unfamiliar with the bankruptcy codes and have tried to pull them up to research them but it is very broad. Does anyone know under any of the Bankruptcy Codes if this debt that she owes me is not entitled for exemption? Any information given would be greatly appreciated.
You are probably too late to file personal bankruptcy now that the law has changed anyway. I don’t believe there is an exemption for life insurance, but you need to see a lawyer. Or maybe work out a plan with your creditors whereby you will give them the money you owe them back over time. Sell your car (take the bus), sell your television, learn how to budget. Sell the children (no, wait, not such a good idea!)
Good luck. Get some help to get out of this mess and to stop you from doing it again!
All debts other than student loans are able to be discharged through bankruptcy. You will have to make sure that you have made a claim against her assets. Since you have a judgment, you should be one of the higher priority claimants on her assets (just behind the secured creditors that have the first priority claim on the specific asset used as collateral). hopefully she has enough in assets that are not being used in collateral to pay your claim. Good luck.
There is a Schedule of Exempt Assets on your bankruptcy petition. You should include your 2007 tax refund stating the amount as “if any” unless you know the actual amount.
Do you have an attorney? Ask him and get an answer from someone who has all the facts and knows your state laws; that’s what you pay him for.
The plan needs a provision to state that assets acquired in these mergers cannot be purchased, period. In fact, what really needs to be done is for the Treasury to buy up the MORTGAGES themselves, not the bad mortgage-backed securities.