Discharge of Tax Claim Counseling

For bankruptcy lawyers who have clients with tax claims (income, sales and use, payroll and employment, property, and excise), we offer our Tax Dischargeability Analysis services and provide a detailed report which will analyze each tax claim and advise you of the earliest date after which you can file your client’s bankruptcy case and ensure discharge of your client’s tax claim(s).

Although most bankruptcy lawyers are familiar with the idea that older tax claims may be capable of discharge, it is important to examine all the events associated with each tax claim since any one of them could impact its dischargeability in bankruptcy. We examine the following events:

• The due date of any tax return considering any valid extension requests
• The actual filing date of the tax return
• Whether the taxpayer filed the tax return
• Whether the taxing agency filed the tax return
• The date of all tax assessments:
• based upon the tax return
• any Substitute-for-return (SFR), or
• any audit/examination adjustments
• The date of all penalty assessments
• Whether the taxpayer signed any statute of limitation waivers
• The date any tax liens were filed along with a review of the validity
  and value of any tax liens
• The existence of all possible tolling events (examples include any
  prior bankruptcy filing, submission, rejection or acceptance of an
  offer-in-compromise, IRS Due Process Hearings requests and related
  Appeals, amended tax returns, etc.)

For each tax claim, the TDA Report will highlight the tax claim in green if it is currently dischargeable, in orange if it’s not currently dischargeable but will become dischargeable in the future, and blue if it’s not currently dischargeable but may become dischargeable based upon some future action we can take, and red if it’s never dischargeable.

For yellow highlighted tax claims, it may prove beneficial for your client to delay the filing of the bankruptcy case. Oftentimes, you can save your client a lot of money by delaying the bankruptcy and negotiating a low monthly payment under the terms of an installment agreement until the tax claim becomes dischargeable, and then file the bankruptcy case.

For red tax claims, even though they are never dischargeable, your client may be able to satisfy this tax claim without penalties and interest.

The Tax Dischargeability Analysis report also contains a client interview checklist to help you identify acts or activities which may constitute red flags or “badges” of potential fraud or willful tax evasion and prevent the discharge of the tax claims if challenged by the government.