Tax Debt and How The Michelson Law Office Can Help YouThe Michelson Law Office is primarily a bankruptcy law firm and we love helping people who have outstanding Tax Debt. We believe bankruptcy in many cases can be the very best way to deal with one’s tax obligations, whether it is the IRS or your respective State Department of Revenue. However we realize that Bankruptcy is not the only option and in some cases maybe not the best. Our philosophy is to look at bankruptcy and see if that is your best option in dealing with your tax debt. If Bankruptcy is not the best way to handle your outstanding tax obligations then we will review with you what the IRS and your State’s Department of Revenue offer in terms of programs to help people with their outstanding tax debt and plan a course of action to help you deal with what you owe.
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An Important Tip About Taxes and Tax Returns
Make sure you always file your Taxes, especially if you owe. Don’t worry about what you owe or how you are going to pay for it. That is why we are here to help you. Just file the Tax Returns. If you fail to file your Tax Returns, There are is no way to help you until you actually get the returns filed. The IRS, State Departments of Revenue or the Bankruptcy Court will not be of any assistance to you if you haven’t filed your tax returns. The attitude of “Well I know I owe so I didn’t file” will lead you to ruin. File your Tax Returns. Especially if you owe. On time. Then call us and we can help you.
How CAN Bankruptcy Law Help WITH Your Tax Debt
In both Ch.7 and Chapter 13 it is possible to simply eliminate or discharge your tax obligations if you have filed your returns in a timely fashion and the tax debt is more then three years old there is a good chance that you will be able to eliminate what you owe in a Ch.7 bankruptcy case.
Chapter 7 takes about 3-4 months total. If your tax obligations meet all the required standards they will simply be discharged in your bankruptcy case. This is usually a rare occurrence to be honest but it does happen. In most cases our clients have some tax debt obligations that they won’t be able to fully discharge in a chapter 7. The question then is should we do a Ch.13 bankruptcy case and have our client pay what they are required to and simply discharge everything else and have a clean slate in 3-5 years when the case is completed.
Ch.13 is particularly helpful when you have tax liens. It is possible that we could cram down what you owe to the value of your personal property. See the example below. This was an actual case that we helped a client with.
Example: Tom owes $150,000 dollars in tax debt secured by his personal property due to a tax lien file by the IRS. He files bankruptcy and his bankruptcy petition lists $10,000 in total personal property assets. Tom paid a total of only $10,000 on his tax obligation of $150,000. The remaining balance was treated as unsecured debt and the IRS received nothing towards it
in Tom’s Bankruptcy Case. He got a discharge.
The most important thing about Ch.13 is that when you sit down with us to sign your bankruptcy petition you are going to know exactly how much you owe and how much you are going to have to pay back.
We do the research, we call the IRS and the Department of Revenue and we get the account transcripts for the years you owe. We will know the balances and the status of your tax debt. So when you go over your bankruptcy case you will know exactly what to expect in your case. Another reason to file a Ch.13 Bankruptcy case is that as long as you co-operate with us, we will be able to get that case filed fairly quickly. Really quickly if it is an emergency.
Ch.13 however serves another important purpose in respects to tax debt. Ch.13 is known as a re-organizational bankruptcy. You are paying off certain debts and simply eliminating other debt through the discharge process. A successful Ch.13 will give you a fresh start and you will be totally organized financially once you emerge from your case. You have to deal with your Tax Debt. You cannot ignore it. Ch.13 provides you a 5 year window of opportunity to deal with your tax obligations and in many cases the debtor does not repay all their tax debts. For the reasons listed above, Ch.13 is one of your best options in dealing with your tax debt.
Chapter 7 takes about 3-4 months total. If your tax obligations meet all the required standards they will simply be discharged in your bankruptcy case. This is usually a rare occurrence to be honest but it does happen. In most cases our clients have some tax debt obligations that they won’t be able to fully discharge in a chapter 7. The question then is should we do a Ch.13 bankruptcy case and have our client pay what they are required to and simply discharge everything else and have a clean slate in 3-5 years when the case is completed.
Ch.13 is particularly helpful when you have tax liens. It is possible that we could cram down what you owe to the value of your personal property. See the example below. This was an actual case that we helped a client with.
Example: Tom owes $150,000 dollars in tax debt secured by his personal property due to a tax lien file by the IRS. He files bankruptcy and his bankruptcy petition lists $10,000 in total personal property assets. Tom paid a total of only $10,000 on his tax obligation of $150,000. The remaining balance was treated as unsecured debt and the IRS received nothing towards it
in Tom’s Bankruptcy Case. He got a discharge.
The most important thing about Ch.13 is that when you sit down with us to sign your bankruptcy petition you are going to know exactly how much you owe and how much you are going to have to pay back.
We do the research, we call the IRS and the Department of Revenue and we get the account transcripts for the years you owe. We will know the balances and the status of your tax debt. So when you go over your bankruptcy case you will know exactly what to expect in your case. Another reason to file a Ch.13 Bankruptcy case is that as long as you co-operate with us, we will be able to get that case filed fairly quickly. Really quickly if it is an emergency.
Ch.13 however serves another important purpose in respects to tax debt. Ch.13 is known as a re-organizational bankruptcy. You are paying off certain debts and simply eliminating other debt through the discharge process. A successful Ch.13 will give you a fresh start and you will be totally organized financially once you emerge from your case. You have to deal with your Tax Debt. You cannot ignore it. Ch.13 provides you a 5 year window of opportunity to deal with your tax obligations and in many cases the debtor does not repay all their tax debts. For the reasons listed above, Ch.13 is one of your best options in dealing with your tax debt.
PROGRAMS TO HELP WITH YOUR OUTSTANDING TAX OBLIGATION
In some cases Bankruptcy is not a good option in respects to dealing with your tax debt. Depending on the amount you owe or the type of tax debt you owe, you may wish to seek other options to deal with your tax debt. The IRS and the Department of Revenue offer several options in dealing with your outstanding obligations
Offer in Compromise
An Offer in Compromise (OIC) is exactly what it sounds like. It is an agreement between the tax payer and the government in which a tax liability is settled in exchange for payment of less then the full amount owed. The IRS and your State Dept of Revenue’s each offer Offers in Compromise. It isn’t easy to get these. IRS has tough standards and your State’s Department of Revenue’s standards are even tougher.
The IRS offers different types of Offers in Compromise for individual Personal Taxes.
1). Doubt as to Liability-Does the Taxpayer actually owe the tax in question. 2). Doubt as to Collectibility-Does the Taxpayer have the ability to pay it back 3). Promote effective tax administration-Rarely Used but a means to collect what is practical and just under the Internal Revenue Code.
You can file an offer in Compromise for Business and Trust Fund Taxes. They are much harder to achieve and the IRS and State Revenue Departments don’t want to grant such an offer unless it is obvious the tax payer will not be able to pay
The IRS offers different types of Offers in Compromise for individual Personal Taxes.
1). Doubt as to Liability-Does the Taxpayer actually owe the tax in question. 2). Doubt as to Collectibility-Does the Taxpayer have the ability to pay it back 3). Promote effective tax administration-Rarely Used but a means to collect what is practical and just under the Internal Revenue Code.
You can file an offer in Compromise for Business and Trust Fund Taxes. They are much harder to achieve and the IRS and State Revenue Departments don’t want to grant such an offer unless it is obvious the tax payer will not be able to pay
Basic Offer in Compromise Facts Taxpayers Should Know
This is not an exhaustive list but the information below are the rules or facts that most tax payers who wish to participate in the IRS OIC program should know before deciding whether or not they think the Offer in Compromise is a realistic possibility for them. Don’t do this alone. We look forward to the opportunity to Help you make your Offer in Compromise a Success !!!!
A). It currently takes a year before you will get an answer from the IRS about whether or not they will accept your offer. The State Department of Revenue is usually much quicker.
B). While you re waiting for the answer to your “Offer” the expectation is that you are making payments on your outstanding tax liabilities and that collection efforts may not stop.
C). There is a $205/filing fee for each offer filed.
D). You can pay in a lump sum amount or pay over two years.
E). If you choose the lump sum option you must send in 20% of what you are offering with your formal offer. You are expected to pay the remaining balance off in within the next 5 months
F). If you choose the periodic payment plan it must be paid off in 24 months. You need to start making these payments immediately upon submission of your offer.
G). If you have the ability to pay the tax in full through an installment agreement or Lump Sum Payment your “Offer” package will be denied.
H). The statute of limitations on collection and audit capabilities of the IRS are extended while you are in the Offer in Compromise and awaiting a response on your offer.
I). If your offer is accepted, for the next 5 years the tax payer must file timely returns and pay any tax debt in full or the Offer will rescinded and the amount forgiven will now be collectible.
J). If your offer is rejected, the IRS will ask you to withdraw it and this ends your appeals rights and it improves the IRS statistics.
K). IRS says no often. The best chance to beat those odds are to become as familiar with the process as possible and get help from a professional who knows how to get this done. For all the rules and instructions see www.irs.gov & also check out the IRS’s OIC Pre-Qualifier Tool also at that sight. It will give you a better idea of what your chances are at success at this program.
A). It currently takes a year before you will get an answer from the IRS about whether or not they will accept your offer. The State Department of Revenue is usually much quicker.
B). While you re waiting for the answer to your “Offer” the expectation is that you are making payments on your outstanding tax liabilities and that collection efforts may not stop.
C). There is a $205/filing fee for each offer filed.
D). You can pay in a lump sum amount or pay over two years.
E). If you choose the lump sum option you must send in 20% of what you are offering with your formal offer. You are expected to pay the remaining balance off in within the next 5 months
F). If you choose the periodic payment plan it must be paid off in 24 months. You need to start making these payments immediately upon submission of your offer.
G). If you have the ability to pay the tax in full through an installment agreement or Lump Sum Payment your “Offer” package will be denied.
H). The statute of limitations on collection and audit capabilities of the IRS are extended while you are in the Offer in Compromise and awaiting a response on your offer.
I). If your offer is accepted, for the next 5 years the tax payer must file timely returns and pay any tax debt in full or the Offer will rescinded and the amount forgiven will now be collectible.
J). If your offer is rejected, the IRS will ask you to withdraw it and this ends your appeals rights and it improves the IRS statistics.
K). IRS says no often. The best chance to beat those odds are to become as familiar with the process as possible and get help from a professional who knows how to get this done. For all the rules and instructions see www.irs.gov & also check out the IRS’s OIC Pre-Qualifier Tool also at that sight. It will give you a better idea of what your chances are at success at this program.
Installment Agreements
Installment agreements, a fairly simple concept. In most cases you will pay back your outstanding obligations in full.
Attorney Abraham Michelson can help you set up an installment plan with the IRS or the State Department of Revenue. However many of the Installment agreements you the tax payer can honestly set up yourself by calling the IRS or State Department of Revenue. Those with larger obligations may need our assistance and we are here to help those who may require a more complex installment plan. However we will encourage those with simpler plans to contact the IRS themselves and save the legal fees. You will need that money to pay your outstanding tax obligations.
Attorney Abraham Michelson can help you set up an installment plan with the IRS or the State Department of Revenue. However many of the Installment agreements you the tax payer can honestly set up yourself by calling the IRS or State Department of Revenue. Those with larger obligations may need our assistance and we are here to help those who may require a more complex installment plan. However we will encourage those with simpler plans to contact the IRS themselves and save the legal fees. You will need that money to pay your outstanding tax obligations.
Achieving Non-Collectible Status
If you owe tax debt but really have no way of possibly paying it back, Then being declared non collectible for a period of time maybe an option for you. Call us to schedule an appointment to review your case and see if you might qualify. Please be advised this is not an easy status to achieve. It is easier to achieve with the IRS then in most cases with the State Department of Revenue.
OTHER TAX MATTERS WE CAN HELP YOU WITH
AUDITS
Are you being audited? We would love to represent you before the IRS or your respective State Department of Revenue, whether it is Wisconsin, Illinois or New York. Whether it’s an agent wanting to sit down with you to review your records or a simple letter audit stating they looked at your return for a recent year and decided mistakes were made and they are increasing what you owe, we would be thrilled to represent you and help you through this stressful experience. Don’t handle an audit alone !!!! It will not end well for you !!! You need qualified experienced legal representation to help you if you are being audited. The Michelson Law Office would love to represent you !!!!
UNITED STATE TAX COURT & APPEALS
Need to appeal any IRS decisions to the United States Tax Court? We can help here too. Attorney Abraham Michelson has been admitted to practice before the United States Tax Court. He looks forward to representing you before the Court on any matter.
CRIMINAL TAX
Are you under investigation or indictment by the IRS, State or the United States Department of Justice for Tax Fraud or Tax Evasion ???? You need to act quickly !!! You need legal representation immediately !!!! Do Not Wait !!!! Contact us immediately to set up an appointment to discuss your next steps and what you can expect to happen. The quicker you act, the better your outcome will be !!!
FINAL WORDS OF ADVICE
Take your outstanding Tax Obligations seriously !!! The IRS & your State Department of Revenue are taking them very seriously. File your Taxes !!!! Especially if you owe. Not filing when you owe taxes is the beginning of major problems for you !!!!
If you don’t file your taxes when you are supposed to; then your options become limited and in some cases quite painful in terms of dealing with your tax debt. We hope the information we have provided to you is useful. We look forward to helping you deal with this stressful situation.
If you don’t file your taxes when you are supposed to; then your options become limited and in some cases quite painful in terms of dealing with your tax debt. We hope the information we have provided to you is useful. We look forward to helping you deal with this stressful situation.