Those who owe a lot of taxes in the country have several options available to them. They can file for bankruptcy, which does not solve their tax debt problems. In fact, it could worsen their financial situation and put them in even more debt.
The major corporations and the wealthy also have very favorable tax situations. If they decided to file for bankruptcy, the economy would be paralyzed. Why is this?
A sudden drop in income means that tax debts are suddenly higher
This means that tax laws require that income be reported on a monthly basis. This is to prevent inflation of incomes.
Filing for bankruptcy does not immediately solve tax debts. They still need to be paid, and creditors will be contacting the IRS. The IRS will still send notices to the debtor’s addresses. Tax debt will still remain after filing for bankruptcy.
Income may be overstated on tax returns, and this needs to be corrected. If it is not corrected, the only alternative to filing for bankruptcy is to find some way to find an accounting expert or lawyer who can correct the errors. This may be expensive, especially if filing for bankruptcy is your first option.
In a serious situation, it is possible to hire an attorney who specializes in the recovery of taxes. When filing for bankruptcy, the debtor’s income will still be used to determine tax debts. Once they know the total amount due, they will need to contact the IRS to get the exact amount of taxes owed. The client will need to be prepared to send the estimated payment to the IRS.
It is not true that all income tax debts can be eliminated by filing for bankruptcy. This is because bankruptcy filings usually reduce the debtor’s income and wealth. There are other debt-relief options available as well. They include debt settlement, debt negotiation, loan forgiveness, and debt-forgiveness programs.
The major debts are often the result of tax debt
However, many debts can be reduced by this option. After a debt has been eliminated, the government takes its amount from the debtor’s property.
The debtor’s assets are real estate, bank accounts, and retirement accounts. In some cases, the government has forfeited real estate owned by individuals because they cannot pay their debts.
What is left is a balance due from the tax debts. After a tax debt has been paid, the government can distribute the balance between tax debts, income taxes, and wage garnishments.
Generally, tax debt relief requires money from the debtor. However, the government is always willing to consider requests for grants from the government, although the process to receive grants is time-consuming.
Not all tax debt problems can be solved through bankruptcy
For this reason, many people with tax debts are turning to non-profit organizations, charities, and social agencies.
This is because there are some who have a professional, experienced attorney, accountant, who knows how to deal with these types of tax issues. Some of these people might be able to help with a variety of tax debt issues.