I have never filed for Bankruptcy, but the IRS is doing what they call a "substitute for return" for my late return. That means no expenses go against any of my earnings. That will put me at about 400k gross and it should be around 125k net. I run a business (just for the big difference in gross and net) and if they do this I will have to file bankruptcy or other. Any good advice?
2007-03-29 11:17:14 · 10 answers · asked by attsthadams 1 in Business & Finance ➔ Taxes ➔ United States
Bankruptcy will not relieve you of a Federal Tax Debt
2007-03-29 11:21:21 · answer #1 · answered by Anonymous · 1⤊ 2⤋
Bankruptcy won't help you with this situation. You have to have filed your returns at least three years prior to the filing of oyur bankruptcy case. So get an accountant to get your taxes in order. You'll have to wait at least three years after you get your taxes in order before you could avoid filing a bankruptcy case. And bankruptcy doesn't discharge all taxes. It doesn't discharge liabilities for others' withholding taxes and it doesn't discharge liabilities for items such as sales tax either.
Chapter 11 and chapter 13 are not particularly good options either. Nowadays, bankruptcy is designed to be an adjunct to tax collections, not a way to avoid taxes for most people.
2007-03-31 02:19:36 · answer #2 · answered by DLeibowitz 5 · 0⤊ 0⤋
Get a tax lawyer quick. Nothing wipes out federal tax debt. Even if you file bankruptcy, close the business and get a minimum wage W2 job... your tiny earnings may be garnished to pay your tax debt.
2007-03-29 11:28:47 · answer #3 · answered by baktum2 2 · 0⤊ 1⤋
Whoah!
I have bad news, and I have good news! So, hold on for this ride, and I will give you the bad news, first.
The bad news, as I understand it...
Federal Income Tax Debt, if it has been less than three years after it was assessed, will not be discharged by bankruptcy.
Now, the good news, as I understand it...
1) Federal Income Tax Debt, if it has been more than three years after it was assessed, may be discharged by bankruptcy.
2) When a taxpayer just cannot pay his income taxes, because of financial hardship, etc, as evidenced by "Collection Information Statement" (Form 433-F), the IRS may put the taxpayer on "Uncollectable Status," which stalls IRS collection efforts, for a time. However, penalties and interest continue to accrue.
3) When Federal Income Tax debt ages over ten years after date of assessment, the tax debt falls off of the IRS computer. The IRS collection efforts, however, may become more aggressive as the ten year mark approaches!
4) When all income tax returns are filed up to date, the taxpayer may attempt to get relief under the Offer in Compromise program and settle for dimes on the dollar of his total tax debt.
5) As I understood the facts in your question, though, you have not yet filed for bankruptcy, anyway. I suggest, by all means, that you gather up your business expenses, report your accurate revenue, deduct itemized deductions, claim costs of capital gain assets sold, etc, on the late return you actually file. The return you file should override any substitute return filed by the IRS!
You may refer to my webpage for a case similar to the one you proposed, here. Go to http://www.phillipfostercpa.com/tax.html and, by all means, use the Free Initial Consultation Form, if you believe I can help you further!
Phil
2007-03-29 15:15:54 · answer #4 · answered by phillipfostercpa 3 · 1⤊ 2⤋
The only way to do anything about tax debt is to talk to the IRS - it does not go away. You better get proactive about your tax debt before you find your financial *** up around your ears. If they are doing a "substitute for return" this is not good, and it tends to get worse if you just lay back and let them screw you with no Vaseline.
2007-03-29 11:23:15 · answer #5 · answered by justbeingher 7 · 0⤊ 1⤋
Generally no, but there are a few exceptions to that. Consult with a bankruptch attorney for advice on that.
If the IRS is doing a substitute return you must be missing one or more years' returns. Get off your backside TODAY and file the correct returns!
2007-03-29 11:27:59 · answer #6 · answered by Bostonian In MO 7 · 0⤊ 0⤋
No, bankrupcy won't wipe away tax debt.
You wouldn't have gotten to this point unless you just plain ignored the IRS for a good while
2007-03-29 11:34:22 · answer #7 · answered by Judy 7 · 0⤊ 1⤋
Unless bankruptcy laws have changed since I last checked them out..
1.) you cannot bankrupt out of any money owed the federal government... [including owed taxes]
2.) you cannot bankrupt out of owed child support...
3.) you cannot bankrupt out of money owed from fraudulent schemes...
------
screw your creditors but settle with the IRS [they can harass you for life]
Does this help any?
2007-03-29 11:29:59 · answer #8 · answered by Anonymous · 0⤊ 1⤋
yes taxes may be included in a bk. however the most recent three years are not bkable. you must pay the prior three years everything else goes bye-bye
2007-03-29 11:30:17 · answer #9 · answered by pianoskill 1 · 1⤊ 2⤋
no they will get you
2007-03-29 11:21:00 · answer #10 · answered by ashlandtree 3 · 0⤊ 1⤋