Greenbelt Tax Debt Lawyer

Trusted Attorney Helping Clients Manage Tax Debts in Greenbelt, MD

Tax debt can be one of the most overwhelming financial burdens a person can face. Falling behind on tax payments can lead to mounting interest, penalties, aggressive collection actions from the IRS or state tax authorities, property tax liens, and other financial issues. Fortunately, bankruptcy can provide a legal avenue for addressing certain types of tax debts, and it can help you and your family receive relief and work toward financial recovery. At The Law Office of Donald L. Bell, we can help you explore your options for managing tax debts through bankruptcy. We will assess your financial situation and debts, help you understand which debts may be eligible for discharge, and guide you through the bankruptcy process to ensure that you can achieve lasting relief from your tax burdens.

What Types of Tax Debts Can Be Eliminated Through Bankruptcy?

Not all tax debts are eligible for discharge during bankruptcy. However, under specific conditions, certain federal, state, and local taxes can be eliminated. Some types of tax debts that may be discharged through bankruptcy include:

• Income Taxes: Federal and state income taxes can be discharged through Chapter 7 or Chapter 13 bankruptcy if they meet specific criteria, including the timing of when the taxes were due and when tax returns were filed.
• Property Taxes: In some cases, property taxes that have been delinquent for a certain period may also be eligible for discharge. However, if the tax debt is secured by a lien on the property, it may still need to be repaid.

On the other hand, certain types of taxes are generally not dischargeable, including:

• Payroll Taxes: Taxes withheld from employee paychecks (such as Social Security and Medicare taxes) are considered trust fund taxes and cannot be discharged through bankruptcy. These taxes must be repaid in full.
• Recent Income Taxes: If income taxes are relatively recent (usually within the last three years), they are not eligible for discharge and must be repaid.
• Tax Penalties: While the underlying tax debt may be eligible for discharge, penalties and fines associated with tax debts often cannot be discharged through bankruptcy, particularly if they were assessed within the last three years.

At The Law Office of Donald L. Bell, we will carefully evaluate your tax situation to determine which debts may be eliminated through bankruptcy, and we will work with you to develop a strategy to address any remaining obligations.

Requirements for Discharging Tax Debts

To eliminate tax debts through bankruptcy, certain legal requirements must be met. In general, only older, unresolved tax debts are eligible for discharge, and recent or fraudulent debts cannot be eliminated. If the following conditions are met, income tax debts may be dischargeable through Chapter 7 or Chapter 13 bankruptcy:

• The Three-Year Rule: The tax debt must be based on a tax return that was due to be filed at least three years before the bankruptcy filing.
• The Two-Year Rule: The tax return associated with the debt must have been filed at least two years before the bankruptcy filing. This requirement applies even if the return was filed late, as long as at least two years have passed between when the return was fined and when you file for bankruptcy.
• The 240-Day Rule: The IRS must have performed a tax assessment at least 240 days before the date on which you file for bankruptcy. If the IRS has reassessed the tax debt within the past 240 days, it may not be dischargeable.
• No Fraud or Evasion: The tax debt must not be the result of fraudulent activity or intentional tax evasion. If the IRS determines that the debt was incurred through fraud, it will not be discharged.

If you meet these conditions, you may be able to eliminate significant amounts of tax debt, providing you with a fresh financial start. At The Law Office of Donald L. Bell, we can review your tax history and determine whether your debts meet the discharge requirements.

Addressing Tax Debts in Chapter 7 and Chapter 13 Bankruptcy

Bankruptcy can be a powerful tool for addressing tax debt, but the approach may vary depending on whether you file for Chapter 7 or Chapter 13 bankruptcy. Each chapter offers distinct benefits, as well as specific procedures for addressing tax obligations.

Chapter 7 Bankruptcy

This type of bankruptcy may be used to quickly discharge unsecured debts, including eligible tax debts. In Chapter 7 cases, non-exempt assets may be liquidated to repay creditors, but in many cases, exemptions can be used to protect most of your property.

For tax debts to be discharged in Chapter 7, they must meet the conditions discussed above. Once the bankruptcy process is completed, eligible tax debts will be discharged, relieving you from the obligation to repay those taxes.

Chapter 7 may be the ideal option if you have older tax debts that meet the discharge requirements, as it provides a relatively fast and straightforward path to eliminating those debts. However, it is important to note that Chapter 7 does not provide a mechanism for repaying non-dischargeable tax debts. If you have a mix of dischargeable and non-dischargeable tax obligations, Chapter 13 may be a better option.

Chapter 13 Bankruptcy

In Chapter 13, you will create a repayment plan that will allow you to reorganize your debts, including tax obligations, and repay them over a period of three to five years. This plan can include both past-due taxes and any penalties or interest, providing a structured way to address the debt while protecting your assets from liquidation.

One of the key advantages of Chapter 13 is that it will allow you to pay off non-dischargeable tax debts over time without facing collection actions. As long as the payments are made, you will be protected from further collection efforts by the IRS or state tax authorities.

In addition to stopping collection actions, Chapter 13 may allow you to eliminate dischargeable tax debts at the end of the repayment plan. Any eligible tax debts that meet the requirements discussed above can be discharged once the plan is completed, reducing your overall financial burden.

At The Law Office of Donald L. Bell, we can work with you to develop a Chapter 13 repayment plan that will address your tax debts and other financial obligations in a manageable way. Our goal is to help you regain financial stability while protecting your assets and reducing your tax burden.

Contact Our Greenbelt, Maryland Bankruptcy Attorney for Tax Debt Relief

If you are overwhelmed by tax debt, bankruptcy may provide the solution you need. At The Law Office of Donald L. Bell, we can help you understand your options for discharging tax debts through bankruptcy, and we can help you develop strategies to address your financial challenges. Contact our office at 301-614-0535 to schedule your free consultation and get the help you need to address tax debts and move toward a more secure financial future.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.