Many Washington residents seek relief through the bankruptcy process when they are faced with staggering debt. It is important to understand that not all types of debts are dischargeable or “wiped out” in bankruptcy. Before starting the bankruptcy process, one should evaluate how their specific types of debt will be treated. Tax debts, for example, are only dischargeable in certain circumstances. Rules related to the age of the debt, the debtor’s tax filings, and other issues may impact the outcome. It is imperative, therefore, to review your financial situation with a bankruptcy attorney. Ben Cushman understands the challenges involved when tax debt arises. If you need assistance with a tax debt matter, contact our office today to schedule a consultation with a lawyer. We also serve Tacoma as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.
Olympia lawyer helping residents determine if income tax debt is dischargeable in bankruptcy
An unexpected income tax liability can wreak havoc on one’s finances. Even a relatively small debt owed to the Internal Revenue Service can seem overwhelming if one is unemployed or has a lower income job. The IRS’ collection tactics are relentless. Receiving a continuous stream of harassing letters threatening legal action, wage garnishment, or the levying of accounts can be frightening. Individuals often feel like they have no way out. In some cases, however, Washington residents may get relief from tax debt through bankruptcy. First, filing a bankruptcy Petition will begin an automatic stay, during which time creditors including the IRS must cease collection actions. The stay period can provide a much-needed break from IRS harassment. Second, it is also possible to eliminate certain tax debt completely through the Chapter 7 bankruptcy process or to repay it over time through the Chapter 13 process. There are very specific limitations, however, governing when tax debt can be discharged. It is important to understand if your tax debt qualifies before initiating such an action. Otherwise, a debtor may remain liable for the tax debt and the IRS may recommence collection actions after the case is concluded.
It is important to note that only income taxes may be discharged. Other types of tax liabilities such as property taxes, trust fund taxes, or payroll taxes may not be released. Furthermore, debt related to the fraudulent or evasive actions of the debtor is not eligible for discharge. Dischargeable income tax debt must be at least three years old. The debtor must have filed tax returns with the IRS in a timely fashion for the two years before the bankruptcy proceedings. In addition, the IRS must not have assessed the debt within 240 days of the bankruptcy Petition. Failing to meet any of these requirements will result in the debt being excepted from discharge and remaining a liability of the debtor. Once a Chapter 7 bankruptcy case is concluded, a debtor may not file for additional Chapter 7 protection for eight years. It is crucial, therefore, to carefully review the timing of the filings to understand if relief is available. Even if one meets the requirements above, the IRS may still object to the discharge of the debt. An attorney will understand how to effectively respond to an IRS challenge.
Ben Cushman is an Olympia attorney. He has been representing Washington residents since 1996. Ben will review your tax debt, tax returns, and any legal actions initiated by the IRS and advise you which bankruptcy option is best for your situation. He understands that every case and client is different and will provide individualized advice to meet your needs. Contact us today to speak with an attorney.
Washington attorney assisting those in Olympia, Tacoma, & elsewhere with tax debt through bankruptcy
Ben is a lawyer who understands that owing money to the IRS can be overwhelming. He knows that bankruptcy may be the only option to avoid wage garnishment or tax lien judgments. Regardless of the events leading to bankruptcy, Ben treats his clients with respect and gives each case the attention it deserves. We believe that everyone is entitled to the highest level of customer service. Ben prioritizes attorney-client communication and promptly answers emails and responds to phone calls throughout the process. This is true whether you are in Olympia or elsewhere.
Our firm also serves the Thurston County cities of Lacey, Tumwater, and Yelm, the Pierce County cities of Tacoma, Puyallup, and Lakewood, the Lewis County cities of Centralia, Chehalis, the King County cites of Seattle, Auburn, Bellevue, Burien, and Federal Way, as well as other areas in Washington, including Grays Harbor, Mason, Cowlitz, and Pacific Counties.