One of the most effective methods for resolution of outstanding tax debt, whether income based, withholdings or sales and use, is through a Chapter 13 or Chapter 11 filing with the Bankruptcy Court. If you have income based tax debts, for which a return was due greater than three years and actually filed greater than two years prior to the filing of a Bankruptcy Petition, those debts may be dischargeable. Additionally, tax debts that do not meet such requirements can still be paid over a five year time, generally with little to no interest.
The other significant benefit or addressing your tax debt through the Bankruptcy Court is that the filing of a Petition will invoke what is called the "Automatic Stay" which blocks all collection actions, including but not limited to levies and garnishments by the IRS, State of New Jersey and other creditors.
In the event that you only have tax debts and would prefer to not file a Bankruptcy Petition, there are alternatives. We have been successful in negotiating various repayment plans with the IRS and State of New Jersey based on what your net cash flow allows you to pay. There are various programs offered by the IRS including the Fresh Start Program. These programs often involve the submission of an Offer in Compromise, where the IRS will accept a lower sum in satisfaction of your tax debt. All of the programs offered require financial disclosures and the submission of the application, of which are very detailed and fact intensive. The application process requires strict compliance and often leads to a denial for even a small misstep or omission. Many clients who have attempted the process alone fail as a result of these strict requirements.
If you have significant tax debt or a taxing authority has already levied on your bank accounts, social security or wages, it is important that you address the issue with an expert immediately. Please contact our office at (732) 292-9288 today to discuss the best available options for you.