Discharging Tax Debt In Bankruptcy: A Guide For Residents Of Amador County, CA

In this article, you will discover:

• Whether you can include tax debt in a Chapter 13 Repayment Plan in California
• Whether you can discharge penalties and interest on tax debt through bankruptcy
• Whether bankruptcy filing stops IRS garnishment of wages and bank levies

Can I Include Tax Debt In A Chapter 13 Repayment Plan In California?

Yes, you can include tax debt in a Chapter 13 repayment plan. The beauty of having tax debt included in a Chapter 13 repayment plan is the IRS no longer charges interest and penalties. Including tax debt in the repayment plan freezes the amount you owe.

Can I Discharge Penalties And Interest On Old Tax Debt Through Bankruptcy?

Any taxes that are more than three years old, filed and not audited can be discharged in bankruptcy. That would include all the penalties, interest and old tax debt. If you file your taxes in April 2021 for 2020, you can then discharge those tax debts in April 2024.

If your taxes were audited, then the discharge is calculated from the date of the audit. If you file late with an extension, the discharge has to be three years from the date of filing.

Can Filing Bankruptcy Stop IRS Wage Garnishments And Bank Levies?

In Chapter 13, you’ll have a payment plan. Those levies and any wage garnishment are included in your plan payment. The IRS won’t receive a wage garnishment or bank levy anymore because you’re already making payments to them.

However, if the IRS files a lien against your property, you can’t discharge that. The IRS is powerful. If they put a lien on your property, you must pay it off.

Attorney Diane Anderson is an experienced lawyer based in Jackson, CA, who has helped countless clients just like you navigate the intricacies of bankruptcy law. With over 19 years of experience, she is prepared to assist you in discharging tax debt in bankruptcy so that you can regain financial stability.

Still have questions? Ready to get started? Contact the Law Offices of Diane Anderson today to schedule an initial consultation.

What Do I Do If I Have Unfiled Tax Returns Before Filing For Bankruptcy?

In Chapter 7, you only need your last filed taxes. In Chapter 13, you must file your back and current taxes.

Are There Bankruptcy Requirements For Discharging Tax Debt In California?

There are no bankruptcy requirements for discharging tax debt in California. You only need to list what you owe. You can get a tax transcript from the IRS that lists that information.

The bankruptcy court will send the IRS notice of the bankruptcy filing, alerting them that your debt needs to be discharged. Once the notice is received, the IRS is supposed to discharge the debt automatically.

Helping Clients With Overwhelming Tax Debt Through Bankruptcy

Many general contractors carry significant tax debts because they’re making a lot of money, but as sole proprietors, they often forget they have to pay taxes.

I’ve helped many general contractors file Chapter 7 or Chapter 13 bankruptcies. Chapter 7 eliminates all tax debt that is more than three years old. If you have current tax debt, you need to file a Chapter 13. By freezing interest and penalties, you save a lot of money.

Do The Advantages of Filing Chapters 7 Or 13 Apply Only To Self-Employed General Contractors?

The advantages apply to anyone who owns a business and does their own taxes.

When you have a job, your employer deducts taxes and pays them for you. It’s often difficult for people working on their own to remember they must pay quarterly or monthly taxes. Suddenly, at the end of the year, they’re surprised they owe taxes on the $100,000 they earned.

I have a current client right now in Chapter 13 who wasn’t withholding enough money, so they owed the IRS. They’re in Chapter 13 for other reasons, but that’s one of the reasons their taxes will be paid, and that’s good for them.

Still Have Questions? Ready To Get Started?

For more information on discharging tax debt through bankruptcy in California, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (209) 245-8788 today.