Tuesday, November 10, 2015

Bankruptcy Relief from IRS and Georgia Tax Debts

Most people are unaware that bankruptcy can be a useful tool in resolving tax debts.   Generally speaking,  if a Georgia or IRS debt for income taxes is over three years old you can obtain a discharge in Chapter 7.   If it is less than three (3) years old, you can consider filing a Chapter 13 bankruptcy or a Chapter 11 bankruptcy and pay this debt over time.

The benefit to this is that interest and penalties stop while you are making payments via a plan, which makes this a better deal than simply working out a payment plan with the IRS or Georgia.    I run into people who have been making payments for years under a payment plan, but the penalties and interest exceed what they are paying.  In other words,  the debtor will owe this money forever.

What if you have failed to file over years because you're afraid of the IRS and Georgia?  I recommend that you go ahead and file your taxes.   When the tax authorities contact you, work out the lowest possible payment plan.   I don't care if it doesn't even cover the interest and penalties.   So long as you are paying, the government is happy.  Make it a priority to pay your current taxes.   After three years of paying on the old taxes, then file your Chapter 7.

Another issue is what if I have failed to pay payroll taxes or sales taxes on my business?  Although the business owes the taxes, the IRS and Georgia will go after the person responsible for these payments.  In one case, a poor lady was hired by some shady businesses to organize and pay their payroll taxes.  The shady businesses failed to give her enough money, and the IRS went after her personally because she wrote the checks!!!  The best advice for this is to shut down the business, and wait for the authorities to chase you.  Typically the IRS and Georgia will accept the basic amount owed without penalties and interest from an individual   Please call if you have any questions.

Please visit my website at tomtierneylaw.com

Please call if you need legal representation to Thomas F. Tierney at (770) 631-1100 or e-mail at tierneylawyer@yahoo.com   Thomas F. Tierney is an attorney who represents clients in south metro Atlanta, including Fayette County, Coweta County, Peachtree City, Tyrone, Fayetteville, and Newnan Georgia.

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