Tax Bankruptcy

• Discharge of Income Tax, Interest & Penalties in Tax Bankruptcy
• Bankruptcy for Sales Tax, Payroll Tax, Trust Fund Tax, Unfiled Tax Returns & Tax Fraud

Eliminate Tax Debt Through Tax Bankruptcy:

Tax debt owed to the Internal Revenue Service (IRS), California Franchise Tax Board (FTB), or California Department of Tax and Fee Administration (CDTFA) may be dischargeable in a Tax Bankruptcy filing. Most taxpayers are surprised to learn that certain tax debts can be eliminated through the bankruptcy process, offering a powerful path to total tax relief. At Tax Lawyers Group APC, our Los Angeles-based tax bankruptcy attorneys specialize in navigating the complex intersection of tax and bankruptcy law to help clients discharge eligible tax debts and achieve a fresh financial start. With extensive experience, specialized training, and a proven track record, we are uniquely equipped to guide you through this intricate tax discharge process.

Can Tax Debt Be Eliminated Through Bankruptcy?

Contrary to common belief, certain tax debts can be discharged (eliminated) through bankruptcy, but the rules are highly specific and complex. Many bankruptcy attorneys and even some tax professionals are unaware of the nuances of tax dischargeability or lack the expertise to apply the necessary legal analysis. Successfully eliminating tax debt in bankruptcy requires a deep understanding of both tax and bankruptcy law, as well as a strategic approach tailored to your unique financial and tax situation.

The types of tax debts that may be dischargeable in bankruptcy include:

• Income Taxes: Federal and state income taxes that meet specific criteria (detailed below).
• Certain Business Taxes: In some cases, taxes such as trust fund penalties or older business-related taxes may qualify.
• Property Taxes: Based on the tax assessment date, some property taxes may be dischargeable in a tax bankruptcy case.

However, not all tax debts are eligible for discharge. For example, payroll taxes, trust fund taxes (e.g., employee withholding portion), and recent tax liabilities typically cannot be eliminated. Additionally, tax liens may remain enforceable even if the underlying debt is discharged, requiring careful planning to address secured claims. Given these complexities, working with a tax bankruptcy attorney who understands the intricacies of both tax and bankruptcy law is critical.

Key Criteria for Discharging Tax Debt in Bankruptcy

To determine whether your tax debt can be discharged, the IRS, FTB, or CDTFA obligations must meet specific criteria under the U.S. Bankruptcy Code. These include:

1. The Three-Year Rule: The tax debt must relate to a tax return due at least three years before the bankruptcy filing date, including extensions. For example, a 2021 tax return due on April 15, 2022, would generally be eligible for discharge in a bankruptcy filed after April 15, 2025.
2. The Two-Year Rule: If a tax return was required, it must have been filed at least two years before the bankruptcy filing. Late-filed returns or unfiled taxes may complicate dischargeability.
3. The 240-Day Rule: The tax debt must have been assessed by the taxing agency at least 240 days before the bankruptcy filing, or not yet assessed but still assessable.
4. No Fraud or Willful Evasion: The tax debt must not involve fraudulent returns or willful attempts to evade taxes. For example, underreporting income or falsifying records can disqualify a debt from discharge.
5. Type of Bankruptcy: Most tax debt discharges occur under Chapter 7 bankruptcy (liquidation) for individuals or businesses with limited assets. Chapter 13 bankruptcy (reorganization) may allow you to discharge some taxes while repaying others over a 3–5-year plan. Chapter 11 bankruptcy may be used for businesses or high-net-worth individuals but is more complex.

Meeting these criteria requires a meticulous review of your tax records, filing history, and financial circumstances. At Tax Lawyers Group APC, our Los Angeles tax bankruptcy attorneys conduct a comprehensive analysis to determine whether your tax debts qualify for discharge and which bankruptcy chapter is best suited to your needs.

Why Tax Bankruptcy Requires Specialized Expertise

Tax bankruptcy is a niche area of law that demands expertise in both tax and bankruptcy regulations. Many attorneys lack the training or experience to navigate the complexities of discharging tax debts, which can lead to missed opportunities or costly mistakes. Common challenges include:

• Complex Legal Analysis: Determining tax dischargeability involves analyzing tax transcripts, statutes of limitations, and bankruptcy code provisions.
• Tax Liens: Even if a tax debt is discharged, a tax lien may remain, requiring negotiation or separate legal action to release.
• Agency Interactions: The IRS, FTB, and CDTFA may challenge dischargeability or pursue collection actions, necessitating skilled advocacy.
• Financial Strategy: Bankruptcy impacts your entire financial picture, requiring careful planning to protect assets and achieve long-term stability.

At Tax Lawyers Group APC, our tax bankruptcy attorneys bring unparalleled expertise to these challenges. Our lead tax bankruptcy attorney is the recipient of the prestigious American Jurisprudence Award for Bankruptcy Law and has served as a bankruptcy legal extern to the Chief Judge of the United States Bankruptcy Court for the Central District of California. Our team also includes former IRS professionals and seasoned tax attorneys with substantial experience in tax law firms, giving us a unique perspective on how taxing agencies operate. This blend of credentials and hands-on experience ensures that we can effectively analyze, strategize, and execute your tax bankruptcy case.

Our Tax Bankruptcy Process

Eliminating tax debt through bankruptcy begins with a thorough and strategic approach. At Tax Lawyers Group APC, we follow a proven process to maximize your chances of success:

1. In-Depth Case Review: We start by conducting a detailed analysis of your tax records, including tax transcripts, returns, assessments, and correspondence with the IRS, FTB, or CDTFA. This allows us to confirm whether your tax debts meet the dischargeability criteria.
2. Financial Assessment: We evaluate your income, expenses, assets, and liabilities to determine your eligibility for Chapter 7, Chapter 13, or Chapter 11 bankruptcy. This assessment also helps us identify any non-dischargeable debts or tax liens that require additional strategies.
3. Strategic Planning: Based on our findings, we develop a tailored bankruptcy plan to eliminate eligible tax debts while protecting your assets and financial interests. We consider alternatives, such as Offers in Compromise or installment agreements, if bankruptcy is not the optimal solution.
4. Tax Bankruptcy Filing and Representation: We prepare and file your bankruptcy petition, ensuring compliance with all legal requirements. Our attorneys represent you in Bankruptcy Court, negotiating with taxing agencies and addressing any objections to dischargeability.
5. Post-Tax Bankruptcy Guidance: After your bankruptcy is complete, we provide guidance on rebuilding your financial health, maintaining tax compliance, and addressing any remaining tax obligations, such as liens.

Our goal is to deliver a seamless and effective tax bankruptcy experience, helping you eliminate eligible tax debts and achieve lasting relief.

Why Choose Tax Lawyers Group APC?

At Tax Lawyers Group APC, our Los Angeles tax bankruptcy attorneys have handled more tax bankruptcy cases than other law firms. We are dedicated to providing personalized, results-driven solutions for clients facing tax debt. Our unique qualifications and client-centered approach set us apart:

• Specialized Expertise: Our team’s experience with the IRS, state tax agencies and the U.S. Bankruptcy Court experience equips us to handle even the most complex tax bankruptcy cases.
• Award-Winning Leadership: Our lead attorney’s American Jurisprudence Award for Bankruptcy Law reflects our commitment to excellence in this field.
• Comprehensive Analysis: We leave no stone unturned, conducting meticulous reviews to ensure your tax debts are eligible for proper tax discharge.
• Proactive Advocacy: We negotiate with the IRS, FTB, and CDTFA to resolve disputes and protect your rights throughout the bankruptcy process.
• Holistic Solutions: Beyond tax bankruptcy, we explore additional relief options, such as Offers in Compromise or penalty abatement, to address all aspects of your tax issues.

Our commitment to client success and deep understanding of tax and bankruptcy law make us the trusted choice for tax debt resolution in Los Angeles.

Is Tax Bankruptcy Right for You?

Tax bankruptcy can be a powerful tool for eliminating certain tax debts, but it’s not a one-size-fits-all solution. Common scenarios where tax bankruptcy may be effective include:

• Older Income Tax Debt: You owe federal or state income taxes from returns due more than three years ago, with no evidence of fraud or evasion.
• Financial Hardship: Your income and assets are insufficient to pay your tax debt, and bankruptcy can provide a fresh start.
• Mixed Tax Liabilities: You have a combination of dischargeable and non-dischargeable tax debts, and a Chapter 13 plan can help manage repayment of non-dischargeable portions.

Our Los Angeles tax bankruptcy attorneys will evaluate your case to determine whether bankruptcy is the best path forward or if alternative solutions, such as an Offer in Compromise or installment agreement, are more appropriate.

Take the First Step Toward Tax Debt Relief

If you’re burdened by tax debt owed to the IRS, FTB, or CDTFA, don’t let uncertainty hold you back. Tax bankruptcy may offer a way to eliminate eligible debts and reclaim your financial future. At Tax Lawyers Group APC, our experienced Los Angeles tax bankruptcy attorneys are ready to guide you through every step of the process with expertise and compassion.

Contact us today at (310) 788-9820 or email us to schedule a confidential consultation. We’ll conduct an in-depth review of your tax records and financial situation to determine if tax bankruptcy is right for you. Visit our website for more information on our tax bankruptcy services. With Tax Lawyers Group APC by your side, you can face your tax challenges with confidence and achieve lasting relief.