The Internal Revenue Service (IRS) is the collector for the income taxes (and other debts) owed to the U.S. government. Tax liabilities generally are divided into two (2) categories: (a.) business taxes, and (b.) personal income taxes. If you have your own business, whether it is corporate or employee income or FICA taxes, you are probably well aware of the various forms of tax liabilities you can be at risk for. For the rest of us, the tax liabilities are usually unpaid personal income taxes.
Regardless of the type, unpaid taxes usually result in the IRS filing tax liens. The IRS and other taxing authorities file many tax liens each week. Often these are followed by seizure of assets, garnishment of wages, and sale of property far below its value. The IRS can even sell your home!
There are defenses against these actions. It is possible to utilize federal law to place an automatic stay against the IRS and repay back taxes over an extended period of time (up to 5 years); or in some cases, to wipe out income taxes that are 3 years old altogether under a Chapter 13 Bankruptcy Plan of Reorganization.
A three-part test is utilized to determine to dischargeability of IRS debt. First, the debt must be at least three (3) years old. Second, the tax liability must not have been assessed within 270 days prior to the filing of the bankruptcy petition. Finally, the tax debt must be unsecured. The discharge of these debts usually involves a complaint being filed and a determination made by the court. Whether one qualifies for a discharge of the IRS debt can be ascertained with an appointment in our office.
The avoidance of taxes is the only intellectual pursuit that carries any reward.
- John Maynard Keynes