Battling Uncle Sam In The Bankruptcy Court

Bankruptcy lawyer as armoured knightIt’s rare when you can get Uncle Sam to funnel clients in your door of your bankruptcy practice.  And at no cost to you.

But that’s the situation if you know how to handle tax issues in bankruptcy.

The IRS threatens, or even worse, levies, and the client is frantic for help.  You, armed as a bankruptcy lawyer, can fight off the feds, and usually lessen the panic.

Taxes – Tops Among Bankruptcy Myths

One of the most prevalent myths about bankruptcy is the one that claims you can’t discharge taxes. The rules that identify which taxes are dischargeable are right there in the code.

Knowing Tax Issues Comes With A Built-In Marketing Arm

Just like family law, the field of taxes in bankruptcy comes with its own discrete set of professionals looking for help for their clients:  accountants and enrolled agents.  Get in their professional network and you’ve enlisted an ally with his own cohort ready to call on you.

Tax Liens

Clients despair when the IRS has perfected a lien for unpaid taxes.  They assume that the lien is forever.  Your hero status is burnished when you can explain that the lien is tied to the collectability of the tax; ceases to attach to newly acquired property after the discharge of the tax; and can be stripped down or stripped off in a Chapter 13.

Taxes Can Be Tricky

The dischargeability of taxes is linked, irrevocably, to issues of timing.  There’s no more certain path to malpractice than to file a Chapter 7 case just short of the date on which large tax debt would have become dischargeable.  The timing of tax filings is one of those things on which I never take my client’s word:  I get a transcript, and see what the IRS says about what’s happened.

Get the Facts About Tax

One of the downloadable session I’ve got available available for you involves dealing with tax issues in bankruptcy.

From now until Friday, February 17, 2012 at 5:00pm Eastern time the session, normally priced at $67 each, can be yours for 10% off when you enter the promotional code LOVE at checkout.

It comes complete with an audio segment as well as forms you can start to use immediately.

You can click here to get this as well as the other downloadable intensive sessions.

Get the tools, the information and the confidence you need to succeed at handling tax-related issues in bankruptcy.

Image courtesy of mharrsch.

 

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  • Marina D.

    Kathy, thank you for your posts.  An attorney I met at the Seattle Bankruptcy Court suggested your site and I’ve been following you when I can.  I am a new attorney and take all of your advice seriously. 

    Was wondering if you know more specifics about L&I tax liability and its dischargeability?  Based on this post does it mean that a once a tax debt has been converted into a lien, it can be discharged in its entirety in Chapter 13? 

    • Anonymous

      A tax can be a priority and a secured claim. That is, a claim entitled to priority could also be supported by a lien. Then the tax is secured to the extent of the value of the collateral, and priority if there is any unsecured balance.

      Often in the case of IRS taxes, the tax underlying the lien is older than a priority tax and therefore the unsecured portion is dischargeable.

      Cathy