Each year the IRS sends tens of thousands of notices of defects, letters of formal notice, and other correspondence entitled “Dear Taxpayer”.
Unless you’re making more than $ 1 million a year, the IRS review rate is around 1 percent. Even if you earn more than that, the exam rate isn’t much higher. Hence, many people believe they can escape what one court called the “steely gaze of the IRS”. But not so fast. Yes, the formal exam rate is almost nothing. But informal audits have closed the gap. Each year the IRS sends tens of thousands of notices of defects, letters of formal notice, and other correspondence entitled “Dear Taxpayer”.
So if you have to repay taxes, perhaps because you are a freelancer who has defaulted on estimated tax payments, it is only a matter of time before the IRS catches up with you. A number of IRS assistance programs are available, but not all are qualified to use them. On the other hand, almost everyone is entitled to the help of a bankruptcy attorney in Athens.
Discharge in a chapter 7
Taxes are essentially information on services provided. These “services” may not be exactly what you wanted, but the bill is still due. Most unsecured debts can be paid off in Chapter 7 unless there is clear evidence of bankruptcy fraud. However, in relation to bankruptcy, the after taxes fall into a separate category. These obligations are senior unsecured debts that can only be paid in certain situations. The applicable rules are:
Student loans are the other primary unsecured obligation. Education debts can be paid if the debtor has undue hardship, an amorphous formulation that has different meanings in different states.
Repayment in a chapter 13
The valuation rule often torpedoes the relief of claims. Once an account is on the IRS’s radar, the service rarely lasts more than a few months without sending a letter. An Athens bankruptcy attorney can absolutely determine whether the IRS has assessed the debt, usually by carefully examining a tax log.
When Chapter 7 isn’t on the cards, Chapter 13 is often much better than an IRS sponsored repayment plan. Pretty much anyone will qualify for Chapter 13 as long as their overdue taxes and other unsecured debts do not exceed $ 400,000. In addition, the automatic stay of bankruptcy normally prohibits the IRS from taking any adverse action, including evaluating penalties and interest, during the Protected Payback Period.
This period is usually three or five years, depending on your income. Every month, debtors give their disposable income to an insolvency practitioner. The trustee then distributes this money among the eligible claims. “Eligible Claims” typically include secured arrears, certain unsecured arrears such as arrears tax payments and administrative fees.