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Bankruptcy Tax Relief Is Occasionally Permitted

Bankruptcy Tax Relief Is Occasionally Permitted
"The majority of tax professionals in the United States, as well as the vast majority of US taxpayers, believe that Federal income taxes cannot be discharged by filing for bankruptcy. However, this is an incorrect belief that belongs in the fallacy category. There are, in fact, conditions under which individuals can receive bankruptcy tax relief at the time they register for bankruptcy.

Gaining tax through bankruptcy proceedings is a complicated matter, and this is certainly one of the reasons why there is so much confusion surrounding this topic. If you owe back taxes to the federal government, it is even more crucial that you seek professional assistance with bankruptcy, as the tax issue complicates the process even further than in a typical bankruptcy case.

When filing for bankruptcy, great care must be taken to ensure that every detail is handled correctly, particularly if any type of taxes are to be included among the debts.

It is extremely difficult to find a middle ground in the labyrinth of US Federal Bankruptcy codes, Internal Revenue Service code, IRS lien and levy rights, and taxpayer protections. In certain circumstances, however, bankruptcy tax relief may be the best option for resolving a severe tax problem and putting an end to the IRS's aggressive collection efforts.

Filing for tax relief under Chapter 13 or Chapter 7 will result in the automatic issuance of a stay. This effectively halts all collection efforts. This includes halting wage garnishments and bank account levies by the IRS and other creditors.

Once the stay is issued, the taxpayer and their attorney have time to determine the best course of action. They can either endeavor to have the tax debt discharged under Chapter 7 or reorganize the tax obligation under Chapter 13. Which Chapter is filed depends on a number of factors, such as the total amount of all debts owed, the debtor's assets, and his or her anticipated future income and capacity to pay under Chapter 13 reorganization.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was enacted by Congress in 2005. This act amended the provisions of the Federal Code governing the petition for insolvency. One of these modifications was the consolidation of the discharge regulations applicable to Chapter 7, Chapter 11, and Chapter 13 bankruptcies.

Given the complexity of the issue, the best advice is to obtain competent assistance if you need bankruptcy tax relief. There is no one-size-fits-all approach to coping with taxes through filing for bankruptcy; rather, each case is evaluated on its own merits and the individual's circumstances are also considered. As a general rule, it is possible to discharge older tax debts, but newer tax obligations are typically treated similarly to property taxes and cannot be discharged.

" - https://www.affordablecebu.com/
 

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"Bankruptcy Tax Relief Is Occasionally Permitted" was written by Mary under the Finance / Wealth category. It has been read 157 times and generated 0 comments. The article was created on and updated on 03 June 2023.
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