Bankruptcy as a last resort
- By Jack Landry
- Published 03/16/2010
- Auditing
- Unrated
Bankruptcy as a last resort
An Offer in Compromise is often the last resort of people who have fallen behind on their taxes and are struggling to pay their established monthly fee to the IRS. These people may face prison, wage garnishment, or a more severe punishment if they do not pay this monthly fee.
Through an Offer in Compromise these people can suggest an amount that they will be able to pay. IRS will then review their situation and accept the offer or decline it.
There are many reasons why an offer in compromise will be either accepted or declined. In 2007, only 12,000 offers out of 46,000 submitted were accepted.
This is only about 26 percent. On the other hand, an Offer in Compromise submitted by a Certified Tax Resolution Specialist has a 90 percent chance of being accepted.
A Certified Tax Resolution Specialist knows when a client is eligible for an Offer in Compromise and can help them make a more effective offer. Many people do not try to get the help of a professional, but simply try to submit the form themselves.
They do not understand the process and make an offer that is completely unacceptable to IRS. This is a waste of IRS' time and their money.
However, there is one more step that can be taken as a last resort to resolve your debt issues. This step is widely known as bankruptcy.
Bankruptcy is the last alternative for someone who is either ineligible for an Offer in Compromise or whose Offer in Compromise was rejected. Correctly proceeding through this process can be very difficult without the help of a Certified Tax Resolution Specialist.
In order to qualify for the elimination of your back taxes, you will have to declare bankruptcy at the right time. There are three main rules involved with declaring bankruptcy and which taxes you will be able to dispose of.
The first rule is that declaring bankruptcy will not relieve you of your responsibility to pay income tax. The only exception is when the income tax you owe is more than three years past the due date.
The second rule is that your returns have to be correctly filed two years before you make your petition for bankruptcy. In this case, Substitutes for Returns do not count as the original file return.
The original files must be submitted and then after two years you can declare bankruptcy and claim more deductions from your back taxes. It is always good to be careful when reading the wording on tax related materials.
The third rule is that you will have to allow 240 days to pass since your date of assessment. The date of assessment is generally the date you file.
However, if you undergo an audit and are charged with more taxes, you will have a new assessment date. These restrictions about when things can be properly submitted for the ideal decrease in back taxes can be very confusing.
Hiring the aid of a Certified Tax Consultant can help you avoid stress and mistakes in filing. They will be able to save you money by getting rid of your debt.
A Certified Tax Consultant will be able to look over your IRS tax transcripts and Records of Account and tell you whether bankruptcy is the correct option for you. Through hiring a lawyer, your bankruptcy files will be created correctly and you will not be tempted to exaggerate your crisis.
Many people who file on their own unconsciously give themselves the benefit of the doubt. As a result they end up in bankruptcy court due to fraudulent files.
These cases have lead to more and stricter laws involving bankruptcy which make the process even more difficult. It is important to fill out the paperwork correctly the first time, otherwise you may be denied.
If you are denied you may have to pay fine. You will not be able to fill for bankruptcy again for quite some time. Choosing to file bankruptcy can be a very difficult decision.
Being accepted for bankruptcy will seriously hurt your credit rating and your ability to get loans or other financial help in the future. The best option is to not fall behind on taxes, but bankruptcy is there for those who get seriously behind.
Through an Offer in Compromise these people can suggest an amount that they will be able to pay. IRS will then review their situation and accept the offer or decline it.
There are many reasons why an offer in compromise will be either accepted or declined. In 2007, only 12,000 offers out of 46,000 submitted were accepted.
This is only about 26 percent. On the other hand, an Offer in Compromise submitted by a Certified Tax Resolution Specialist has a 90 percent chance of being accepted.
A Certified Tax Resolution Specialist knows when a client is eligible for an Offer in Compromise and can help them make a more effective offer. Many people do not try to get the help of a professional, but simply try to submit the form themselves.
They do not understand the process and make an offer that is completely unacceptable to IRS. This is a waste of IRS' time and their money.
However, there is one more step that can be taken as a last resort to resolve your debt issues. This step is widely known as bankruptcy.
Bankruptcy is the last alternative for someone who is either ineligible for an Offer in Compromise or whose Offer in Compromise was rejected. Correctly proceeding through this process can be very difficult without the help of a Certified Tax Resolution Specialist.
In order to qualify for the elimination of your back taxes, you will have to declare bankruptcy at the right time. There are three main rules involved with declaring bankruptcy and which taxes you will be able to dispose of.
The first rule is that declaring bankruptcy will not relieve you of your responsibility to pay income tax. The only exception is when the income tax you owe is more than three years past the due date.
The second rule is that your returns have to be correctly filed two years before you make your petition for bankruptcy. In this case, Substitutes for Returns do not count as the original file return.
The original files must be submitted and then after two years you can declare bankruptcy and claim more deductions from your back taxes. It is always good to be careful when reading the wording on tax related materials.
The third rule is that you will have to allow 240 days to pass since your date of assessment. The date of assessment is generally the date you file.
However, if you undergo an audit and are charged with more taxes, you will have a new assessment date. These restrictions about when things can be properly submitted for the ideal decrease in back taxes can be very confusing.
Hiring the aid of a Certified Tax Consultant can help you avoid stress and mistakes in filing. They will be able to save you money by getting rid of your debt.
A Certified Tax Consultant will be able to look over your IRS tax transcripts and Records of Account and tell you whether bankruptcy is the correct option for you. Through hiring a lawyer, your bankruptcy files will be created correctly and you will not be tempted to exaggerate your crisis.
Many people who file on their own unconsciously give themselves the benefit of the doubt. As a result they end up in bankruptcy court due to fraudulent files.
These cases have lead to more and stricter laws involving bankruptcy which make the process even more difficult. It is important to fill out the paperwork correctly the first time, otherwise you may be denied.
If you are denied you may have to pay fine. You will not be able to fill for bankruptcy again for quite some time. Choosing to file bankruptcy can be a very difficult decision.
Being accepted for bankruptcy will seriously hurt your credit rating and your ability to get loans or other financial help in the future. The best option is to not fall behind on taxes, but bankruptcy is there for those who get seriously behind.
Jack Landry
Jack R. Landry has worked since 1988 as a tax attorney. He has written hundreds of articles about finding a Bakersfield tax attorney.
Contact Info:
Jack R. Landry
JackRLandry@gmail.com
http://www.TaxCrisisInstitute.com
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