High Income and Bankrupting Income Taxes

Taxpayers in higher income brackets whom find themselves in a tax crisis almost always ask if they will be allowed to discharge their taxes if they legitimately can not pay them. Taxpayers whose income falls in between 100 and 500 thousand dollars a year actually can. While the IRS won't publicly admit this nor give persons operating dishonestly any ideas a good tax attorney can help persons in this income bracket protect their income and their belongings.

The Devil's In The Details

While many higher income persons may jump with excitement when they learn that they can discharge their tax debts with a chapter 7, there is some fine print taxpayers need to be aware of. Most importantly discharged taxes must be actual income and not payroll trust fund taxes. The amount of tax debt must exceed the amount of debt. Persons whom meet these requirements will almost always, assuming there is no fraud, be allowed to discharge their income.

The Right Tax Attorney

Persons in this higher income bracket who are considering a bankruptcy for the purposes of tax debt relief will need a very good tax attorney at their back and their side. The IRS and state tax agencies will often use intimidation to get away with unlawful and unethical practices. Lesser and/or inexperienced tax attorneys will often fall prey to these tactics just as taxpayers do so it's vital that individuals in this scenario seek out the very best using the internet, reviews, and even speaking with past clientele.

The Bankruptcy Reform Act of 1994

There was once a time where both the IRS and state taxing agencies where legally shielded from what was otherwise considered unlawful collection practices both before and after a bankruptcy. Taxing entities essentially had carte blanche when it came to collecting taxes from individual taxpayers and businesses. Moreover they were allowed not to recognize bankruptcy or to behave as though it wasn't an issue.

Thank You President Clinton

In October of 1994, the 22nd to be exact, then President Bill Clinton signed into law The Bankruptcy Reform Act. In an effort to be as pragmatic as possible this law negated "sovereign immunity" and forced the IRS and state level tax agencies to rethink and give pause before pursuing collections against persons going through or concluding a bankruptcy. Under this law taxpayers gained the right to sue tax agencies for damages, attorney fees, and in some cases all costs whenever they are pressured or forced into collections.

Protection From Tax Agencies

Although the The Bankruptcy Reform Act of 1994 has saved many taxpayers the hassle and burden of having to deal with tax agencies and the IRS during or after a bankruptcy these agencies are big and powerful. Big and powerful agencies, like people, often become and operate arrogantly. The IRS and state tax agencies will sometimes still try and intimidate bankrupted persons into paying a tax debt; those that do will be hoping that a taxpayers ignorance and fear coerce them into paying when they don't have to. Tax crisis's require a tax attorney and one that specializes in tax crisis's. These types of tax attorney's will ensure that the rights of taxpayers are upheld, recognized, and that the IRS and other tax agencies adhere to the mandates of The Bankruptcy Reform Act of 1994.

Beware The Tax Crisis Scam

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If you are having a tax crisis you're obviously going to want and need the help of a competent and experienced tax attorney.  Even with the best tax attorney at your side dealing with the IRS can be an intimidating, stressful, and confusing experience. Unfortunately there are some unscrupulous tax professionals that prey upon frightened, flummoxed, and desperate individuals. Such persons run a variety of scams that are designed to take money from persons needing help and don't actually solve their tax problems.

Types Of Tax Crisis Scams

The vast majority of tax attorney scams involve either selling services that don't actually solve tax issues or flat out lies about what a taxpayer is and isn't qualified for. Victims of these scams often fall into deeper trouble with the IRS and lose substantial amounts of income in the process. Other scams might involve individuals whom are either unqualified to operate as a tax attorney or aren't tax attorney's at all. Regardless of what's involved in the actual scam the swindle is fairly simple. Tax/IRS relief solutions are offered to desperate people whom in turn pay scam artists for something that doesn't solve their problems and may make them worse.

The Difference Between Acting Quickly and Rushing

When an individual rushes they tend to make mistakes, forget things, react poorly, be susceptible to suggestion, and generally cause more harm than they do good. Persons whom act quickly but don't rush often pull through crisis's with little trouble. Taxpayers in need of a tax attorney will undoubtedly want to act quickly but rushing to hire anyone without doing proper research can be detrimental to their situation and their bank account. It behooves taxpayers to utilize the internet in their search for a tax attorney and to spend some time on their phones interviewing attorney's of interest. Being informed before hiring a tax crisis professional can ensure that an individual gets the help they need.

An Economically Sensitive IRS?

The United States economy has been in a slump for the better part of a decade now. Juxtapose that with a poor jobs market, the rapidly rising cost of living, layoffs, and even rising gasoline prices and it's should come as no surprise that many families are struggling financially. Things have become so strenuous that even the IRS has taken steps to ensure that it can still do it's job while at the same time easing tax burdens for everyone. In 2009 the IRS implemented several new strategies to deal with collection problems and financial hardships.

Solving Collection Issues

·         The first thing the IRS did was give itself the ability to suspend collections in cases where a taxpayer is seriously ill, dependant on Social Security, or is unemployed/underemployed. In some cases the IRS suspends collection without documentation.

·         Rather than the rigid installment payment plans the IRS has been known for in the past, the institution became much more flexible in these plans, allowing taxpayers to pay less when necessary, defer payments, and set lower monthly minimums.

·         Although the IRS' obtuseness regarding the releasing of levies is both well known and documented, the IRS has been more empathetic and relaxed when it comes to releasing bank levies. Since 2009 more taxpayers have had their levies released than ever before.

·         Due to the real estate market being so adversely affected by the failing economy the IRS began reevaluating taxpayer's homes in 2009 in an effort to reassess equity. This has eased tax burdens on many a taxpayer.

Policies Vs Reality

Although the IRS has done right by many taxpayers since 2009 and used these new policies to great effect, it's not all sunshine and rainbows for taxpayers. Many still struggle with the stubbornness of the IRS, unreasonable IRS employees, and a general lack of compassion. This is why it's of vast importance to have a good tax attorney at your side anytime you have dealings with the IRS. A tax attorney can and will protect a taxpayer from intimidation, call the IRS on its bluffs, educate taxpayers about their rights, and ensure those rights are enforced.

Administrative Summons: Know Your Rights

Tax payers having issues with the IRS may feel as though there is a surprise around every corner. These surprises may also leave them feeling intimidated. The moment a tax payer feels as though they've got a handle on things the IRS pulls the rug out from under their feet. One of the most common surprises tax payers are forced to deal with is the "Administrative Summons". Taxpayers often receive Administrative Summons when they won't agree to appear for an interview or submit requested financial records. Administrative Summons essentially require a taxpayer to appear before the IRS regardless of whether or not they have procured a tax attorney. Complicating matters, many taxpayers are under the impression that they must appear alone, without their attorney. Nothing could be further from the truth as taxpayers have a legal right to have their attorney present and consult with them during the proceedings that follow an Administrative Summons.

Being Proactive

Taxpayers who know that tax issues and dealings with the IRS are inevitable should not wait until the IRS takes official action to find and hire a competent attorney. Doing so will not only help put trouble minds at ease but will also result in taxpayers knowing what rights they do and do not have. As it pertains to Administrative Summons, taxpayers whom hire an attorney early will find out that these summons are not self enforcing and that they may not necessarily need to report without a judicial order, which the IRS may or may not pursue. It behooves anyone whom knows they'll soon have dealings with the IRS to find and hire a tax attorney sooner rather than later.

Contact A Los Angeles Tax Attorney Today