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.