Dealing with the Internal Revenue Service can be a terrifying, frustrating experience. Too often, hardworking taxpayers are left feeling hopeless and helpless in the wake of being slapped with an alleged tax debt they have no hope of paying.
Colorado Springs Bankruptcy Attorney Stephen H. Swift is committed to standing up for the rights of consumers; he does not buckle when the creditor is the federal government. Consumers have rights. And, in the face of what is often brutal indifference on the part of the IRS, bankruptcy protection can be a powerful tool.
Consumers dealing with the Internal Revenue Service should always be represented by experienced legal counsel. Never is that truer than when facing allegations of back taxes or tax fraud.
Income Taxes and Bankruptcy in Colorado Springs
The difference between being sanctioned for unpaid back taxes and being accused of tax fraud is quite significant. Not only can criminal charges apply to tax fraud allegations, but such debt cannot be discharged as part of a bankruptcy.
There are also a number of strict time limits:
- Tax debt may be discharged if returns were filed at least two years ago.
- Tax debt must be incurred at least three tax years ago.
- You have not been assessed tax liability within the proceeding 240 days.
And, while bankruptcy may result in discharged income tax debt, it will not remove tax liens. These time constraints make it even more critical to consult an experienced attorney as soon as you believe you may be dealing with a significant tax issues.
Colorado Springs Bankruptcy & Debt Forgiveness
Income tax issues may also arrive via debt forgiveness. If you are dealing with a foreclosure or short sale, for instance, the government may count the resulting debt forgiveness as earned income. This can result in thousands of dollars in taxes being owed.
In such cases the creditor will submit a 1099-C form to the IRS, showing debt forgiveness as earned income. You may be able to use Form 982 to show you were insolvent at the time of debt forgiveness.
Even in cases where tax debt cannot be forgiven, or discharged, getting your financial affairs in order can make satisfying the debt much easier. By discharging other unsecured debts, such as credit card debt, you can focus on paying back the IRS and putting the issue behind you for good.
Failure to deal proactive with tax debt can make it difficult or impossible to address in the future – particularly once tax liens have been imposed. By consulting with experienced legal counsel early and often, you stand the best chance of prevailing in a tax fight with the federal government.
A Colorado Springs bankruptcy lawyer can assist you in determining the best course of action for your individual case. The Law Offices of Stephen H. Swift is here to aid consumers in the bankruptcy process.
Serving clients in in Colorado Springs, Pueblo, Denver and the surrounding area.
Colorado Springs bankruptcy – 866-893-2440 or 719-520-0164 – legal consultation
