Bankruptcy Law/back taxes

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Expert: - 3/4/2008


Question
We have back taxes from 1997 - 2004. We have considered bankruptcy if it would clear our tax issue.  We did last year start a new corporation under a new name. Would this hinder us as well?

Answer
First off, there is hope. However, I can't try to give you any guidance as to the issues dealing with the corporation. It is just too complicated to attempt that via long distance. Filing bankruptcy when you own a business and have tax issues is just not a "do it yourselfer." Please, please, please get good local representation from a bankruptcy attorney.

However, I can help you to understand the tax issues in very general terms. However, this is only a generality and there may be exceptions in anyone's case that may cause a different (bad) result. You simply have got to get expert hands-on advice from a bankruptcy attorney and tax specialist to really know how things stand in your own case.

Income taxes may discharge if all of the following criteria are met, (and be sure to discuss your tax issues with your attorney before you do anything else):

1.  The taxes must be more than three years old at the time the Bankruptcy was filed. The three-year period begins to run from the time the returns were due, (often that is April 15th of the following year, but sometimes a different date applies) plus any periods of extension;

2.  If the return was not filed on time, more than two years has expired since the return was filed;

3.  If there was an assessment, more than 240 days have expired from the date of the assessment; there is no lien on any assets which you intend to keep;

4.  There has been no fraud.

If you intend to discharge taxes with your bankruptcy filing, I recommend that you obtain a complete history of your tax obligations from the I.R.S. and consult a tax professional before filing the bankruptcy. That is the best way to find out what you can expect.  

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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