Bankruptcy and Tax Debt in Arizona
Failure to have your employer withhold proper taxes from your paycheck or to pay self-employment taxes can leave you with thousands of dollars to pay in back taxes. Without generous savings, paying these back taxes can be extremely difficult, making filing for bankruptcy extremely attractive.
If you continuously ignore the issue of paying your back taxes, the government might seize your assets, including your home, car, retirement savings or other belongings. Losing these assets can have a huge impact on your life and make things very difficult for you and your family. There are several steps you can take when facing paying off back taxes, one of which is filing for bankruptcy.
Set up a repayment plan with the IRS
If you can’t currently afford to make a lump-sum payment to the IRS to make up for your back taxes, you can contact them to set up a payment plan over time. This will help you work toward paying off that debt without losing your valuable assets and without causing undue hardship on you and your family.
When the IRS sends you a notice of taxes that you owe, there should be contact information on the notice, including a phone number. Check for the appropriate time to call that number and then start the conversation to work toward paying off your debt.
Click here for information on eliminating tax debt in bankruptcy.
Request an administrative resolution
In some cases, you might be paired with a representative that you don’t work well with due to differences in communication style or some other issue. If you’re faced with this type of situation, you can petition for an administrative resolution where you’ll receive an administrative hearing before an administrative panel.
You’ll have the opportunity to present your case if you feel as though the IRS is overreaching on its collection efforts as you work to repay your debts while keeping your assets, such as your home. While it is possible to represent yourself in such an administrative hearing, you should consider hiring an Arizona tax attorney who can represent you and ensure the best possible outcome for the hearing.
Tax issues can arise from a dishonest spouse, which leaves the other individual in trouble through no fault of their own. If your spouse hid income or otherwise didn’t disclose the proper amount on taxes, you can apply for Innocent Spouse Relief. The process is complicated though so you should seek out an attorney who can help you through this process to give you the best chance of successfully arguing that case.
File for bankruptcy
Owing taxes can be the final straw for your finances. If you owe more than 50 percent of what you make in a year, filing for bankruptcy might be the best option for you. Getting in over your head with financial obligations is not all that uncommon and bankruptcy can help you reset your finances.
You have multiple options when it comes to filing for bankruptcy in Arizona. In some cases, you can keep your assets and in others, you must liquidate your assets to pay off your debts as much as possible before they discharge the rest.
Taxes are one of the types of financial obligations that you can have discharged as part of a bankruptcy filing. While it is not a decision you should take lightly, it is an option for helping you get back on your feet after unexpected expenses or overstretching yourself financially.
Before deciding to file for bankruptcy, you should discuss your options with an attorney. An Arizona bankruptcy attorney will guide you in making the right decision for you and your family as far as how to pay back taxes and other financial obligations.
Click here for answers to common questions about Arizona bankruptcy laws.