Stop Fearing April 15 and Work with a Leading Tax Debt Attorney
April 15 is nearly here: a date that, for many, reminds them less of springtime and more of another dreaded encounter with the IRS.
Millions of people need tax debt relief. Back taxes cause an incredible amount of stress and worry, especially if you’re unsure how to pay them off.
However, there are solutions. Many people who experience tax debt don’t realize that there are legal approaches that can help get relief. Perhaps this is because these strategies are difficult to pull off without the help of an attorney.
An effective resolution to your difficulties requires a debt relief lawyer who listens to your circumstances and develops a winning legal strategy. The Wink Law Firm, the leading Denver debt relief attorneys, recommend these three options to find a new path forward, so you’ll no longer fear 4/15.
Debt Relief Solution #1: Offer in Compromise
The first question you should ask yourself when looking for tax debt relief is whether your debt is less than three years old (in 2024, that would mean no earlier than 2021). For those with tax debt that isn’t more than three years old, The Wink Law Firm will evaluate you for what is called an offer in compromise.
An offer in compromise may lead the IRS to collect only a portion of your tax debt and discharge the rest. To determine that portion, the IRS conducts an analysis of your finances: namely, your income, assets, and expenses. From this analysis, the IRS determines how much disposable income and equity you have available to determine reasonable collection potential (RCP) or the amount you could pay after an analysis of your finances.
Typically, if you can offer an amount equal to your RCP, the IRS will accept this offer. Much like credit card debt settlement, the IRS allows you to pay a lump sum or in installments. The Wink Law Firm views a lump-sum offer in compromise as an ideal scenario, given that payment plans require six installments over 24 months.
Although an installment plan may be effective for some work in some cases, those struggling with debt may find that a payment plan is not the best solution this early in your shift toward financial stability. We look forward to discussing this with you to determine the most beneficial and cost-effective option for you.
The good news is that offers in compromise exist, and, if you have state tax debt for the same tax years you get relief from the IRS, the state will often honor the same percentage offer the IRS accepted. If your tax debt has not come due in the past three years, additional options are available. Keep reading to learn more.
Debt Relief Solution #2: Discharge Through Bankruptcy
Bankruptcy is a powerful tool. It is also a legal right in the U.S. that was founded to protect us from inhumane practices like the debtor’s prisons of the 19th century, a common practice in less evolved times. You now have an opportunity for freedom from debt that you can exercise legally based on certain requirements.
An often significant issue in Chapter 7 or Chapter 13 bankruptcy is your household income. If you are beneath the median household income for your household size in Colorado (which recently changed to $77,331 for a single-person household) you may be eligible to have your tax debt discharged in Chapter 7 bankruptcy. Even if you are over the median income for your household size, you may avoid repaying taxes and other debt based on your income if the majority of your debt is so-called non-consumer debt, which includes tax debt and business debt. If the majority of your debt is non-consumer debt, you are eligible for Chapter 7 bankruptcy even if your income is well above the median for your household size.
Here are the additional requirements for discharging your tax debt:
- The tax debt you owe is from taxes that were due at least three years ago. (If your tax debt is less than three years old, consider an offer in compromise, the debt solution mentioned above.)
- You filed the return at least two years ago. This requirement has been construed to also mean that you cannot get out of a tax debt in bankruptcy if the IRS has filed a return for you [known as a Substitute for Return (SFR)]. This arises when you don’t file your return on time. If the return is unfiled for years, the IRS may prepare a SFR for you. This is bad news because it means the taxes will never be dischargeable in bankruptcy. That said, you can probably reduce your liability for any year the IRS prepares and SFR by filing a return. This is because an assessment via SFR is as high as it can be under the law. You can almost certainly reduce the amount owed by filing a return after the IRS files an SFR.
- The IRS has not assessed your tax debt for 240 days or more.
- You’ve never been convicted of tax fraud, tax evasion, falsifying tax returns, or other crimes related to your federal or state taxes.
If you are not eligible for Chapter 7 bankruptcy because of Colorado’s income threshold, Chapter 13 may be your solution.
In Chapter 13 bankruptcy, you have to pay into a Chapter 13 payment plan for 3-5 years. The amount you have to pay depends on your income, expenses, assets and types of debt. If you have tax debt that is from a return due within the past three years, that debt is non-dischargeable in Chapter 7 and is a “priority debt” in Chapter 13. “Priority debt” must be paid in the Chapter 13 payment plan. You don’t have to repay “non-priority” debt unless your income or assets require it. While ‘priority’ tax debt cannot be discharged in Chapter 7 bankruptcy and must be paid through a Chapter 13 Plan, “non-priority” debt including non-priority tax debt (e.g., taxes from returns due more than 3 years ago) can often be discharged in both Chapter 7 and Chapter 13 bankruptcy.
Debt Relief Solution #3: Customized Tax Debt Relief from The Wink Law Firm
If you’re unsure whether you are eligible for an offer in compromise or bankruptcy, or if you feel you need to explain your situation clearly to get further legal advice, meet with a debt relief attorney at The Wink Law Firm.
The Wink Law Firm gives each of our clients customized debt relief help. For example, if the IRS is garnishing your wages to collect on your tax debt, our Denver debt relief lawyers can develop a strategy for you.
No matter your circumstances, The Wink Law Firm will deliver a solution that settles your debt for the least amount of money and helps you recover financially.
Explore Debt Settlement Options and More with The Wink Law Firm
If you’re unsure which of these three debt relief solutions makes the most sense for you, but you’re still willing to take action, you’re in the perfect position to benefit from a debt relief attorney’s help. At The Wink Law Firm, we present effective strategies that work for our clients. We’ve seen them work for countless people, and we know one of our solutions will work for you.
Too many people struggling with debt get stuck doing nothing about their situation because they are either afraid to face it or somehow hope that something “better” will come down the line. This doesn’t work.
The Wink Law Firm has excellent opportunities for debt settlement and bankruptcy available now. You can end the miserable game of tax debt and give yourself a fresh start that isn’t haunted by the mailbox, the phone, and the words “tax season.” Taking advantage of an expert lawyer for debt relief in Denver can alter the direction of your financial life for the better.
Reach out for a free consultation. We’ll listen to your story, field your questions and concerns, and develop a legal strategy that works for you. Contact us online or call us at (720) 523-0620 to begin your journey toward freedom from tax debt.