IRS Tax Debt Attorneys in Los Angeles
Resolve Back State & Federal Income Taxes
Everyone wants to be able to make timely tax payments. But financial hardships can make it difficult, if not impossible to discharge tax debt. An experienced lawyer can help you get the IRS tax relief you deserve and stop tax penalty consequences, including interest.
At Resnik Hayes Moradi LLP, our attorneys in Los Angeles help our clients manage their debt and get IRS tax relief. Through Chapter 7 and Chapter 13 bankruptcy options, it is possible to stop IRS garnishment and IRS levy actions to obtain immediate relief.
Contact us today for a 30-minute risk-free consultation. It could be your first step out of the dark and into the light.
Can I File for Bankruptcy on Tax Debt?
- With Chapter 7 bankruptcy, you will get an immediate stay and discharge qualifying tax debts.
- With Chapter 13 bankruptcy, you can reorganize your debt under a three-to-five-year payment plan, instead of the IRS’s six-month plan, offering you a chance to breathe and structure some of the chaos.
When Can Bankruptcy Discharge Unpaid Taxes?
The U.S. Bankruptcy Code permits discharge of certain back taxes, but several conditions apply.
- Taxes must be personal income tax. There are two kinds of tax debt, either business or personal. Generally, most business taxes are not dischargeable. The dischargeability of business taxes, which include sales and payroll taxes, depends on what classification they fall under.
- Taxes must be at least 3 years or older. Taxes assessed over three years ago are possibly dischargeable through both types of bankruptcy. For example, if an individual filed for bankruptcy on August 19, 2011, only taxes that were due before April 15, 2008, could be discharged. If an extension was filed for the taxes due in 2008, then the taxes would not be dischargeable until October 15, 2011. Otherwise, you can get IRS tax relief as you pay it off under a plan you can afford.
- Tax returns must be filed at least 2 years before filing. The individual must have actually filed the late tax return at least two years before he or she filed for bankruptcy. For example, if the taxes were due for 2003 but the tax return was filed in February, 2010, the individual’s taxes could not be discharged in bankruptcy unless he or she wait to file for bankruptcy until February, 2012 or later.
- Taxes must be assessed for more than 240 days before filing. The taxes must have been assessed against the individual at least 240 days before he or she filed for bankruptcy. Basically, assessed means that the IRS made a notation that the individual owes taxes, as clarified in a 2010 bankruptcy court case.
- No taxpayer misconduct. An individual’s taxes may not be discharged in bankruptcy if the back taxes resulted from taxpayer misconduct such as filing a fraudulent tax return or tax evasion. Misconduct also applies to taxpayers who failed to file a tax return altogether and never got around to filing it. No discharge is available to taxpayers who did not file taxes on their own.
- No tax liens. Even though an individual’s back taxes may be discharged in bankruptcy, they may still face difficulties with the IRS or state taxing authority if the taxing entities placed a tax lien on their assets. If a tax lien has been secured, even if the individual’s back taxes are discharged, the IRS later may be able to enforce the lien against his or her assets like real estate or a retirement plan. Sometimes the IRS will remove their tax lien if the individual’s tax debts are discharged in a bankruptcy and the taxpayer does not really have any significant personal possessions.
If you have received a certified letter from the IRS saying you owe taxes, you have 30 days to respond. If you fail to respond, the IRS will go after you. Their process is quick and if you fail to take it seriously, you will face an even tougher challenge.
Are Business Taxes Dischargeable?
In California, any business taxes that are considered “trust fund taxes”, which includes taxes that have been withheld by a business on behalf of another individual for the taxing authorities, are non-dischargeable in bankruptcy. Typically these are most of the sales or payroll taxes. “Excise taxes” on the other hand, which are taxes collected for the benefit of being allowed to conduct business in a state, are dischargeable. Certain “non-trust fund” payroll taxes may be dischargeable as well.
Deadlines May Be Extended
One of the reasons it is important to consult with an experienced local bankruptcy attorney when trying to determine if a tax debt is dischargeable is because certain events can stop or even reset the clock governing tax dischargeability.
Filing either an appeal of an audit, an offer in compromise or an action in U.S. tax court each may cause the three-year, two-year and 240-day requirements to be extended, putting consumers at risk of filing for bankruptcy too early when those requirements are not yet met.
We Are Here to Help
Providing big firm experience in a smaller firm setting, our Los Angeles and San Fernando Valley law offices provide a casual and accepting environment. We are open Monday through Friday from 7 a.m. to 7 p.m., as well as weekend appointments. Our attorneys offer long-term payment plans to help you through this difficult time.
Our Los Angeles bankruptcy attorneys are committed to your best interests. Call us at (213) 344-0043 today to schedule an appointment.
Without the support of pro bono attorneys we couldn't do all the work we need to do, and your firm in particular is outstanding.- Skip K.
Was very impressed with the comprehensive professionalism of the firm...- G.L
He not only saved my house but also got rid of all my debt. They are not your typical attorneys and their creativity really allowed me to do things that other attorneys never mentioned in previous consults.- David K.
He negotiated on my behalf with a credit card company and was able to settle with them for much lower than I could have on my own.- Kelly S.
I cannot thank them enough for helping save my home. I would recommend them for anyone that is thinking about filing for bankruptcy or foreclosure on their home.- Joseph R.