What is the reason behind hiring a tax attorney for bankruptcy?
Bankruptcy and tax attorney are essentially required when you are contemplating bankruptcy. The lawyer can guide his clients to discharge unsecured, secured and tax debts. There are many people who contemplate bankruptcy to get relief from the burden of tax debt when other debt solutions fail. After the recent economic meltdown, many people defaulted on their payment. In order to generate more revenue to pay of the government debt to stabilize the economy the IRS has become more aggressive in its tax collection. Therefore, many people are filing bankruptcy with tax and non–tax related debt to start afresh.
But you are required a tax attorney while you file bankruptcy petition with the court as the bankruptcy procedure has become more complex recently. Here are the following reasons why you require a tax attorney while filing bankruptcy:
1. A tax attorney can guide you by analyzing the amount of your tax debt that can be discharged through bankruptcy. He will determine the amount on the basis of the type and amount of tax owed. It‘ll be also based on when the IRS or state assessed the tax inclusive of interest and penalties. Bankruptcy lawyer based on this analyzes will design a repayment plan under chapter 13 bankruptcy. This will help you pay back the non–dischargeable portion of the tax interest and penalty fee. An efficient tax attorney can negotiate with the IRS to lower the priority and non–priority tax debt as well as stop tax garnishments. He can guide you to file an Offer in Compromise simultaneous with chapter 7 or 13.
2. Debtors under chapter 7 or chapter 13 can keep a considerable amount of tax refund. The tax attorney will comparatively analyze your income tax withholding with exemptions before you file bankruptcy. The amount you save will be determined on the basis of when you file bankruptcy.
3. The small business owners might have to deal with issues like payroll and withholding issues. An attorney will calculate your overall gross income with deductions from disposable income when you’ll undergo Means Test in order to evaluate tax you are required to pay the IRS. A tax attorney will help you go through the correct tax forms to complete the process. He’ll be able to advise you on how much income and deductions you should claim. The attorney will help you reorganize your business in order to legally pay as low amount of tax as possible then it might be beneficial for the filer as he can allocate funds. This process is known as smart pre–bankruptcy planning like contributing to a retirement plan or mutual fund.
4. A bankruptcy filer who hires the services of a tax attorney can legally protect assets from creditors and the trustee. The lawyer with his deft knowledge will employ Exemption laws in order to ensure that his client’s assets are protected from being liquidated.
Therefore, these are the four most important reasons behind hiring a tax attorney for bankruptcy.
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