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Social Security And Taxes
Tax Day
Many senior citizens preparing for retirement may not realize that their Social Security income could be taxable under certain conditions. When determining whether Social Security income is taxable the government uses a formula that calculates the taxable amount. Basically when a senior citizen’s income from other sources, such as a 401K or investment property plus half of their Social Security income exceeds $32,000 as a couple or $25,000 as a single person some of the Social Security income will become taxable.
That’s not a lot of money, so seniors need to be prepared for the tax bill which can really affect their bottom-like. Unlike earlier generations, many senior citizens are retiring with large amounts of debt including a mortgage. These debts are an added burden to the medical expenses that are more likely to increase with age and the tax burden that seems to never go away. But if a senior citizen is facing a heavy tax burden and/or debt burden that is making it difficult for them to survive during retirement, the bankruptcy laws do offer some tax relief help.
Most types of consumer debt and even some tax debt can be discharged in a Chapter 7 Bankruptcy , especially for those who are on a low fixed income. Call a Dallas-Fort Worth bankruptcy attorney today to hear about bankruptcy options that may be especially beneficial to senior citizens.
Considering Loading Your Tax Refund On A Prepaid Credit Card? Just Say “NO”
As if tax preparation companies haven’t come up with enough schemes to pry money out of taxpayers’ hands, now some tax preparation companies are encouraging taxpayers to load their tax refund on a “convenient” prepaid credit card.  Just say no to this new scheme which will leave the tax preparers and banks with more of your hard earned money.
Why you should avoid loading your tax return on a prepaid credit card:

  1. Prepaid credit cards usually have an ATM fee.  What that means is that when you go to withdraw your money from an ATM you will be charged by the issuing bank and probably by the bank who owns the ATM. This could easily add up to more than $4 or $5 per withdrawal.
  2. Even if you try to get around the ATM fee by going to a bank, there is usually a charge to use the teller also.
  3. Need to make more than a few calls to speak with an agent of the prepaid credit card company?  You will need to pay another fee.
  4. Not using your prepaid credit card enough?  There is another fee-an inactivity fee.
  5. Unlike unsecured credit cards you will not receive any interest payments on the money you have on deposit.  Instead you will end up paying a steady stream of seemingly non-ending fees.

While it may be tempting to go ahead and load your tax refund on a prepaid credit card, do yourself a favor and just have the tax preparer issue a check, even if it costs extra.
Bankruptcy Trustee Forced to Return Tax Refund
n the bankruptcy case of Martin, Renee M.; In re, 19 CBN 870 (Bankr. N.D. Tex. 2009) the bankruptcy court ruled that the bankruptcy trustee must return the balance of a joint tax refund to the non-filing spouse.
The details of the bankruptcy case:
“The debtor filed for Chapter 13 relief on Dec. 31, 2008. The debtor’s husband did not join her in filing for bankruptcy. The debtor and her husband subsequently filed a joint federal tax return. The debtor did not earn any wages during 2008. The couple’s tax refund of $6,482 was based wholly on her husband’s earnings. The court ordered that $1,556 of the refund be applied to cure an arrearage in plan payments, $444 be paid to the debtor, and the balance be held by the trustee pending further order of the court.”
However, the bankruptcy court later determined that since the tax refund came from the non-debtor’s earnings, it was the non-debtor’s solely managed community property. The bankruptcy court ordered the trustee to return the balance of the tax return to the non-debtor spouse because it is not the property of the bankruptcy estate.
This is good news for debtors filing bankruptcy who have non-filing spouses who are the sole breadwinners. Oftentimes debtors who have faced a job loss fear that filing bankruptcy will endanger the earnings and/or assets of their non-filing spouse. Well under Texas law, solely managed community property (including wages) of the non-debtor spouse is not property of bankruptcy estate. To find out more about community property and bankruptcy speak with a Dallas-Fort Worth bankruptcy attorney.
Court Rules Tax Refund Partial Belongs To Bankruptcy Estate
In the Chapter 7 bankruptcy case of Krahn, Joseph A. and Kerri K.; In re, the bankruptcy court sustained a bankruptcy trustee’s ruling that the debtors turnover $3,952 from their federal income tax refund.
The details of the bankruptcy case:
The debtors filed for Chapter 7 relief on Aug. 29, 2008. Their 2008 federal tax return showed no tax liability, but $6,916 in refundable credits including earned income credits of $4,216, additional child tax credits of $1,632, and excess withholdings of $1,068. After an IRS adjustment, the debtors received $6,149 on Feb. 13, 2009. The debtors’ 2008 state tax return showed a $232 tax li­ability, but refundable credits of $1,291 including earned income credits of $717, a food sales tax refund of $156, and excess withholdings of $418. The debtors received a refund of $684 from the state on July 9, 2009. Both refunds were turned over to the debtors’ counsel pending the court’s de­termination of how much belonged to the bankruptcy estate.
The bankruptcy trustee in this case determined which portion of the debtors’ tax refund should go to the bankruptcy estate by dividing it into prepetition and postpetition portions, with the postpetition portion going to the bankruptcy estate.  The debtors called the bankruptcy trustee’s methods unfair because the birth of a child and an injury of the debtor-husband caused the amount of the EIC to increase.  But the bankruptcy court ruled in favor of the trustee saying that dividing the refund in such a manner was appropriate.  The bankruptcy court ruled that the trustee could recover $3,952 of the tax refund minus any portion that was part of the sales tax refund on food.
Struggling Real Estate Developers May Get Power To Tax You
Along the lines of the strange and perhaps outrageous, there’s an article in the Dallas Morning News reporting that the Dallas City Council is considering (today 2/11/09) giving real estate developers the power to tax Dallas-Fort Worth residents. That’s not a misprint.
The article said:
The plan to create special taxing areas, known as municipal management districts or MMDs,… Under the plan crafted by the city, just 65 percent of landholders in a given area would need to sign a petition to apply to become an MMD. And once the petition was issued, a simple majority of those landholders could vote to create the MMD and seek the required approval from the City Council and Texas Legislature. Such districts potentially could place significant new tax burdens, in addition to regular municipal taxes, on property owners who never asked for it and don’t want it.
This is how it would work:
A group of landowners (65%), also known as DEVELOPERS in your area decide that they want to create a MMD. If the MMD is approved, they (the real estate developers) can tax everyone in the district, including individual homeowners, many of which are already facing foreclosure and are otherwise financially burdened.
This tax would be in addition to any other taxes the people living in that “special tax area” pays. But not just that, the developers would get a cut of the money as the article points out.
“It’s a good tool for us to use because it creates a funding source for the development community at rates below what they would normally be able to receive” through private financing, said council member Ron Natinsky, chairman of the council’s economic development committee.
Exactly! A funding source for the development community. Right, that’s we thought. Let’s think about this for a minute, just a few days ago we talked about how the IRS is giving taxpayers facing bankruptcy more options regarding paying delinquent taxes, we’ve talked about how many homeowners are facing foreclosure and home many Americans in all walks of life are facing bankruptcy.
How are these people going to pay an additional tax? Is this going to prevent more homeowners from facing foreclosure and bankruptcy or likely increase the number? Plus, who elected developers and gave them the power to levy taxes? That just doesn’t sound right.
Tax Refund Averages
Although the season of taxes has passed, it is always very interesting to hear about the figures and averages in relation to tax time. According to the Internal Revenue Service, for those who received a refund this year that refund averaged to about $3,000 per person.
With about 52 million Americans who filed their taxes, over 45 million of them collected some sort of a refund, according to the Internal Revenue service. Specifically, the average refund was $3,129, and those who received their refunds through direct deposit got about $3,257.
Robert Willens who is a tax professor at the Columbia Business School stated that many people will have a lot of their taxes withheld and then plan ahead for their large refund with plans to use it for things like purchasing a car or going on vacation. At the same time he claims that this is not a good thing to do economically because it is like an interest free loan to the government.
Those who filed taxes online this year was also up by 2 percent versus those who did so last year. About 28 million people have a professional prepare their taxes. The numbers of those who did their own taxes has also increased, likely because everyone is trying to save money. Specifically, the number jumped 6 percent versus the previous year when 19 million filed their own taxes.
Although these statistics do not talk about how many people owed money to the Internal Revenue Service, there are plenty of those individuals out there as well. While the average refund was around $3,000, many people owed that much or thousands more in tax debt when it came to tax time. If you owe the IRS money, you should contact a legal professional. They can sit down with you and go over all your options in how you can get rid of your debt.
Could Tax Refund Anticipation Loans Become A Thing Of The Past?
This year is the first time that the IRS has stopped providing tax preparation companies and financial institutions with a “debt indicator,” making tax refund anticipation loans a lot more risky. The debt indicator use to let lenders know how much of a risk as taxpayer was allowing the bank to make an informed decision about how much to lend the borrower. However, without this information, tax refund anticipation loans may become a thing of the past. Already, many tax preparation companies are reporting that they are making significantly fewer loans to taxpayers and that many would be borrowers are shying away from the loans because of high fees. Could tax refund anticipation loans become extinct?
Some say that’s possible because many taxpayers take out the loans because they don’t want to wait to receive their check weeks later from the IRS. But now with IRS services such as an e-filed tax return, many taxpayers are able to get their refund direct deposited into their bank account within 10 to 14 days. Unfortunately, many unbanked taxpayers are still relying on the tax refund anticipation loans because they don’t have a bank account, but the high fees can quickly eat away at their money, not to mention the problems they run into if their tax refund was over estimated or somehow gets garnished due to unpaid tax debt . As a solution some tax preparers are now offering debit cards on which they load the tax refund; but this service can also be laden with high fees. Unbanked individuals may be better off looking for ways to find a low cost bank account and using it to cash and deposit their refund check.
H&R Block Will Not Offer Tax Refund Anticipation Loans
H&R Block announced that it will not offer “tax refund anticipation” loans to its tax-preparation customers this year due to actions by federal regulators to stop H&R Block’s banking partner from offering the high-interest loans. The inability to offer the tax refund anticipation loans could cost the company about $146 million and they have reported that they have no immediate strategy to replace that income. But that may be good news for taxpayers, especially the poor and those who are living on a fixed income. The tax refund anticipation loan industry is a billion dollar venture but has come under scrutiny by consumer advocates and federal regulators due to high interest and fees.
Taxpayers should consider the following:

  1. You may not need the loan.  Taxpayers can have their tax refunds direct deposited into their bank account within about eight days after they file their taxes electronically.
  2. Tax firms such as H&R block have a financial incentive to guide you into these loans.  They are high interest and have fees that go directly onto their balance sheet. Consider doing your taxes with a firm which does not lean heavily on these types of loans for their revenue.
  3. You may not get an accurate estimate of your tax refund amount.  If the tax preparation firm overestimates the amount of your tax refund, you could be stuck paying the difference.  Avoid being stuck with a tax refund anticipation loan payment after tax season by just avoiding the loan in the first place.

IRS Announces New Tax Preparer Regulations
You won’t see any changes this tax year, but the IRS is planning to require tax preparers to pass a test and register with the government so they can more effectively oversee a largely unregulated industry used by many taxpayers.
[Doug] Shulman [IRS Tax Commissioner] said he hopes to have all paid tax preparers registered by the 2011 filing season. Preparers will be given about three years to meet competency requirements, though there is much work to be done to develop standards and tests.
Eventually, tax preparers will be required to complete annual training and will be subject to penalties for unethical conduct, Shulman said. Taxpayers will be able to check the credentials of preparers on a public IRS database.
And while the new regulations won’t affect the 2010 tax season, the IRS is stepping up enforcement on tax preparers this year.  The IRS plans to send notices to 10,000 tax preparers who have a history of making errors on customers’ tax returns. Also, the IRS plans to make in person visits to tax preparers and some of them won’t be announced. The agency will send IRS agents posing as customers to see if the preparers give accurate advice. Lawyers, certified accountants and agents registered with the IRS won’t be affected by the new regulations.
The new regulations come as good news for many taxpayers who have been victims of bad advice given by unregulated tax preparers. For debtors who are considering bankruptcy, please remember, you will need to file your taxes this year and give a copy to your bankruptcy attorney. Be careful and make sure you work with an experienced tax preparer and avoid preparers who charge fees based on the size of your refund.
No More Taxes For Seniors? Yes If President Obama Has His Way
Since we’re living in an age of “internet government” I decided to take another virtual trip to the White House web page and found another interesting tidbit of information about reforms supported by the new President Obama administration.
According to the White House, President Obama would like to:

  • Eliminate Income Taxes for Seniors Making Less Than $50,000: Obama and Biden will eliminate all income taxation of seniors making less than $50,000 per year. This will provide an immediate tax cut averaging $1,400 to 7 million seniors and relieve millions from the burden of filing tax returns.

Pretty radical, huh? I thought so too. Taxes and other debts are definitely financially strangling senior citizens who are facing foreclosure and other financial difficulties. Eliminating income taxes for senior citizens would go a long way in tax relief help in their golden years.
Many seniors facing difficulties such as foreclosure use bankruptcy to discharge or repay their taxes currently; but if the reform is actually pushed through it would radically alter the financial landscape for many seniors citizen. But for now, if you’re a senior citizen and are having difficulty repaying your tax debt or other debts contact a bankruptcy attorney to discover your bankruptcy options.
Chapter 7 bankruptcy and Chapter 13 bankruptcy offer viable options for handling taxes and other debts.
Stimulus Payments May Bite Taxpayers In April
Stimulus payments may equal a bigger tax bill for millions of Americans.  More than 15 million taxpayers may owe the government $250 or more because of how the IRS organized last spring’s tax breaks which were designed to help lift the economy out of the recession. Due to IRS errors everyone from married couples to struggling students may be forced to fork over up to $400 to Uncle Sam.
Who Should Be Concerned
If you worked two jobs you may have received a $400 dollar stimulus at both places of employment. One of those payments must be returned to IRS once you file your taxes.
Dual-income households. If you and your spouse both work and make more than $13,000 a year, you may need to return up to $400 to the IRS once you file you taxes.
Working students. If you were a single student who worked a part-time job you may have received a $400 increase in your take home pay. However, if your parents claimed you as a dependent on their tax returns you must return the full amount of the stimulus payment.
Working retirees. More than 50 million Social Security recipients received $250 payments; however, retirees who were working will have that $250 payment deducted from their tax credit.
Unfortunately, taxpayers who received extra stimulus payment in 2009 will face penalties imposed by the IRS. Those penalties will be removed but ONLY if you request it.  Remember, the mistakes made during this stimulus program are the fault of the IRS.  Don’t pay for their mistakes. Please take the time to calculate how much you will owe at tax time.  If you are unable to pay your taxes on time, you can file for an extension, request payment plans or even defer payments. Note, interest may still accrue during any deferment or payment plan.
Uncle Sam Giving Taxpayers A Break…Well Maybe…
According to an article in the Dallas Morning News, the IRS is softening some it’s strategies for handling delinquent taxpayers and those who simply can’t pay.
The article said:
“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” said IRS Commissioner Doug Shulman. “We want to go the extra mile to help taxpayers, especially those who’ve done the right thing in the past and are facing unusual hardships.”
Some of the actions the IRS is taking are:

  • Giving IRS employees more power to suspend collections on taxpayers who have experienced job losses . Although, this option has always been available not just to those who have experienced job losses; but other hardships such as a health crisis etc.
  • Making installment plans more flexible and accommodating taxpayers who miss a payment or who need a reduced payment plan because of a job loss or other financial hardship.
  • Releasing levies on a taxpayer’s personal property (bank accounts, real estate, wages etc.) if is causing a financial hardship.

I suspect that with at least 6 million jobless Americans many people will be using these opportunities to handle tax obligations they simply can’t pay. But just in case you find yourself unable to benefit from the IRS plans, you can use bankruptcy to repay taxes or even discharge them under certain circumstances.
A matter of fact, you may want to talk to a bankruptcy attorney before you go to the IRS about your tax debt so that you have a backup plan just in case they decide that your financial hardship isn’t “hardship” enough to give you a break on your taxes.
TaxMasters Files Chapter 11 Bankruptcy
TaxMasters, the Houston-based company that claimed to offer tax relief help, is seeking its own relief through bankruptcy.  The company filed for Chapter 11 bankruptcy over the weekend while facing claims of allegedly deceiving consumers when it comes to their tax help relief services.  The company founder is,Patrick Cox, the bushy-beard late night pitchman seen in dozens of commercials on various television stations.
It has been reported through court documents that the company has less than $50,000 in assets but owes possibly up to $10 million to more than 1,000 creditors.  As if owing creditors wasn’t enough to deal with, TaxMasters has been facing allegations of deceptive practices.  Consumers who call the toll-free number shown during the commercials were not transferred to a tax professional, but to a sales representative of the company, according to the Attorney General’s office.  TaxMasters didn’t disclose to consumers that fees for services had to be paid up front, meaning that some missed tax deadlines with the IRS.
TaxMasters claimed to help individuals settle their tax debt with pennies on the dollar but many consumers felt the saying was a fabrication.  There have been several complaints about the company and its practices from numerous consumers with some consumers paying the company more than $3,000 and received nothing in return.  The State of Texas has a case pending against the company.
Recent talks with the attorney for TaxMasters claims the company laid off many of its workers recently and is no longer accepting new business.  The company is basically shut down with its offices nearly vacated.  Although the bankruptcy petition has been filed, it’s unclear if refunds will be issued to consumers whether or not the State of Texas wins its trial.
Foreign Taxes Uncollectible In Bankruptcy
In the Chapter 11 bankruptcy case In re: BearingPoint, Inc., et al., Chapter 11, Debtors, the bankruptcy court ruled that the Republic of Indonesia could not collect on taxes owed using the U.S. bankruptcy court. The Republic of Indonesia filed two proofs of claim in the BearingPoint bankruptcy, one for $389,000 and the other for $3.5 million.  However the bankruptcy judge said that even if the debtor in the Chapter 11 bankruptcy owed the taxes, he could not collect on behalf of the foreign entity. Citing what’s known as the Revenue Rule, the bankruptcy judge said that he could not enforce tax judgments of a foreign country in a U.S. bankruptcy court.
The Revenue Rule is a longstanding common law doctrine providing that courts of one sovereign will not enforce final tax judgments or unadjudicated tax claims of other sovereigns. It has been defended on several grounds, including respect for sovereignty, concern for judicial role and competence, and separation of powers. See Attorney General of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 109 (2d Cir. 2001).
The bankruptcy judge also went on to emphasize that he was not refusing to collect the tax debt simply because it was Indonesia asking for payment, noting that the same rule has been enforced when dealing with taxes owed by debtors to Canada who have sought bankruptcy protection in the U.S.  It’s important to note that the bankruptcy judge does not discharge the debt simply because it is coming from the foreign state; but he also does not allow the foreign taxing authority to receive payments from the bankruptcy estate once a repayment plan has been established in the Chapter 11 bankruptcy.
New Horizon’s Tax Debt
Deputy Tax Collector Shirley Boyce reported that Cummings Solomon and her company New Horizons Capital Investments owe a tax of $46,000 to the town of Norway on the 12 properties that she owned during the tax year 2010-11. Out of the total amount of $45,998, $36,097 tax is due on currently owned New Horizons Capital Investments properties; $2,427 tax on a commercial building that was sold in Sept. 2010; $2,994 on one parcel under the name of Dawn Cummings Solomon; and $4,480 on three parcels under the name of Dawn Cummings. Solomon, the wife of co-principal of New Horizons Capital Investments Harvey Solomon, was charged for the embezzlement of $4 million of the states money through her Living Independence Network Corp. She will be sentenced in Oxford County Superior Court on February 18. If the taxes are not paid before next September, the town will obtain a legal claim on the properties and eighteen months later, legal proceedings on each property will be initiated.
The raid on the 180 Main St. property by state and federal agents was followed by sending a tax bill of $2,427.10 to the New Horizons Capital Investments Corp for payment. Later, the Mechanics Savings Bank of Lewiston placed and sold this property on a foreclosure auction for mortgage conditions violated by New Horizons Capital Investments on Oct. 22. Although the property was sold, Boyce said, that since New Horizons Capital Investments was the owner on record the time the tax bill was generated, the liability of the tax bill also lies on it.
Similarly, she said that the next bill will be generated in September and in the name of the person who owns it at that time. If the old owner doesn’t pay the tax, the new owner has to come forward to pay it off and if they don’t, the property can be subjected to a lien. Negotiation between the owner and the town then takes place in an attempt to retrieve the tax bill and give the title back to the owner; however, if it doesn’t work out, the property is put on sale so as the sale revenue can reimburse the unpaid tax bill.
Besides the Norway properties, New Horizons Capital Investment Corp also owns property in Harrison. The tax debt they owe on this property is $10,000 as well as interest accrued. Moreover, the company is also obliged to pay $1,575 plus interest on two apartment buildings in Paris. Five Norway properties are up for sale currently and according to Solomon’s attorney, the Portland Maine Attorney General’s Office is notified of property sales; however, there are no property sale restrictions currently being placed.
Sagging Tax Revenues Shake Up Dallas-Fort Worth
According to an article in the Dallas Morning News, slumping sales-tax revenues are forcing Dallas-Fort Worth municipal officials to monitor their budgets and prepare for possible cuts.
The article said:
Dallas is preparing for a projected budget deficit of as much as $100 million for next fiscal year… The deficit projection in Dallas is based in part on declining sales-tax revenue and a stagnant property-tax base. Lagging sales taxes also are affecting transportation entities such as Dallas Area Rapid Transit.
Less spending equals less taxes and we’re not just talking about sales taxes either, property taxes are being hit very hard because of the foreclosure crisis. The reduction in tax revenues can have devastating effects on a city’s ability to provide the basic services necessary to make any city livable—water, sewage, police and fire protection, not to mention access to fully staffed and equipped schools. Let’s just look at California if we want an example of what happens when tax revenue declines and cities are faced with budget deficits.
This is why it is so important for us to get a handle on the foreclosure crisis facing us. For every foreclosure, there is a loss in tax revenue that may be greater than the initial loss in property tax revenue. Many homeowners who face foreclosure are forced to leave and live in other states with family or friends, causing further loss in tax revenue that would have been gained if they remained paying for products and services in the city. The bottom line is that everything is interconnected and the foreclosure crisis seems to be at the root of our current financial problems including the decrease in tax revenue.
Dallas-Fort Worth Property Values (And Taxes) Plummet
According to an article in the Dallas Morning News, property tax revenues are set to plummet for 2009 as home values tank.
The article said:
About 92 percent of all residential properties will either fall in value or remain the same, said Ken Nolan, the county’s chief appraiser.
Foreclosures , a decline in building permits and rising office vacancy rates have conspired to send property values and property taxes downward for the first time in about 20 years. Although this may be good news for individual homeowners (specifically those not in foreclosure), for the community, it could turn out to be a disaster. Property taxes are necessary to fund our police, schools, firemen and other public services. If revenues from property taxes continue to decrease we may face more budget cuts or even the discontinuation of some services. The key ingredient to this decline in property value is the huge number of foreclosures entering the housing market and driving down prices even in some of the most sought after areas.
It’s foreclosures that have begun a devaluation process, that if allowed to continue can endanger the stability of communities by eradicating the tax base on which we all depend. This is why it is absolutely necessary that Congress move quickly to help homeowners avoid foreclosure and by extension save our communities from a rapidly disintegrating tax base. This is why we want Congress to change the bankruptcy laws and allow bankruptcy judges to modify these toxic mortgages that are root cause for so many foreclosures in our community. We must act now before it’s too late.
Maryland Man Convicted on Multiple Counts of Bankruptcy Fraud and Filing a False Tax Return
A federal jury recently convicted 42 year old Ricardo O. Curry of Randallstown, Maryland of four counts of bankruptcy fraud, two counts of filing a false tax return, one count of false testimony under oath during bankruptcy proceedings and four counts of falsifying bankruptcy records.  According to county officials, Curry failed to report more than $740,000 of income and assets while attempting to fraudulently discharge over $1 million in debt through bankruptcy.
Curry worked for a North Carolina corporation, Peerless Real Estate Services Inc. that oversees property sales throughout the state.  Curry would recruit investors and receive referral fees.  He recruited 12 investors to purchase at least 23 lots during 2005, 2006, and 2007.  For each year, Curry earned fees of over $40,000, $43,000, and $330,000 respectively.  He reported fees earned as a sales representative for a pharmaceutical company on his tax returns for the same years, yet he didn’t report the referral fees of more than $400,000.
In March 2009, Curry filed for Chapter 13 bankruptcy in Maryland.  When he filed, he reported income earned as a sales representative for a pharmaceutical company for 2005, 2006, and 2007, but not the referral fees from Peerless Services.  He had ownership interest from a home that totaled roughly $325,000 that he also failed to report when he filed.  In July 2009, he filed an Amended Statement of Financial Affairs and again, failed to report over $400,000 in referral fees from Peerless Services.
When he met with creditors in October 2009 during bankruptcy proceedings, he falsely stated while under oath that all assets were listed, when he knew the referral fees and home ownership interest was not included.  He also failed to provide his trustee with documentation regarding his hidden income.  When Curry tried to discharge debt in April 2010 it was denied.
Curry faces up to 20 years in prison on each count of falsifying bankruptcy records, up to 5 years in prison on each count of bankruptcy fraud and up to 3 years in prison for each false tax counts.  Curry will be sentenced in June 2013.
Reference:  https://www.fbi.gov/baltimore/press-releases/2013/randallstown-man-convicted-of-bankruptcy-fraud-and-filing-false-tax-returns
Bankruptcy Court Splits Joint Income Tax Refund
In the Chapter 13 bankruptcy case of (Halverson, Michael; In re), the bankruptcy court ruled that the Chapter 13 debtor’s bankruptcy estate was entitled to half of the joint income tax refunds received by the debtor and his nonfiling wife.
The details of the bankruptcy case:

“The Massachusetts Department of Revenue (MDOR) filed a proof of claim in the amount of $64,172 including $14,936 for joint income tax liabilities of the Chapter 13 debtor and his nonfiling wife. Because the debtor’s wife did not join in the Chapter 13 petition, statutory interest and penalties continued to accrue on her obligation to pay the joint tax liabilities.”

It’s important to note here that the nonfiling spouse does not benefit from the automatic stay of interest accrual enjoyed by the spouse who filed bankruptcy.  Ultimately they will both suffer financially once “her half” of the income tax liability must be repaid.  This is something to think about has you consider whether to file bankruptcy with or without your spouse.

“After the debtor filed for bank­ruptcy, he and his wife filed joint income tax returns that generated refunds of $948 and $986. Pursuant to state law, the MDOR offset both refunds to the prepetition joint tax liabilities. These offsets did not reduce the MDOR’s claim because they were applied to statutory interest and penalties that accrued postpetition. The court agreed with the debtor that the MDOR could not offset the entire amount of the joint tax refunds to the statutory interest and penalties that accrued only on the wife’s obligation. “The postpetition tax refund of a Chapter 13 debtor is unquestionably property of the bankruptcy estate,” the court said.”

The court ruled half of the tax refund belonged to the bankruptcy estate and should be used to benefit the creditors in the bankruptcy case. They also warned the MDOR that offsetting tax refunds that are property of the estate not in accordance with the limited exception set forth in the bankruptcy code violates the automatic stay.
Source: Consumer Bankruptcy News, Volume 19, Issue 18, page 9
California Man Pleads Guilty to Tax and Bankruptcy Fraud through Homeowner Scheme
William Barry Blythe, 67, of Murrieta, California is charged with one count of bankruptcy fraud and submitting a false tax return. Blythe carried out a homeowner scheme that included creating multiple fake trust accounts that claimed to hold the title of homeowner properties. In doing so, he claimed to take ownership of the mortgages but instead kept payments homeowners made into his personal trust account.
Blythe plead guilty as part of a plea agreement in late March that included misrepresenting the bankruptcy court and failing to report income on his tax returns. He carried out a scheme meant to defraud homeowners, mortgage lenders and two California bankruptcy courts.
Blythe had more than 5 trusts created and approached homeowners struggling to make mortgage payments. He told homeowners he would negotiate with their lenders to get better terms for their mortgages. The trusts were supposed to be tied to property titles of each homeowner.
The homeowners were directed to place their deeds into the trusts, but Blythe never negotiated with lenders regarding the properties. He made homeowners pay a monthly fee that homeowners thought were going into the trusts he set up. Instead, he was collecting the money into a personal family trust he created.
The mortgage lenders were misrepresented when Blythe claimed he bought the properties but he never did. He also claimed he would take responsibility for them by assuming the mortgages but this did not happen.
Later, Blythe filed bankruptcy in central and southern California court districts. He claimed he bought the properties but made no income. He also claimed he owned mortgages and had other unsecured debts. His cases got dismissed.
From 2010 through 2012 he filed false tax returns leaving out over $177,000 in taxes. Part of his plea deal includes agreeing to pay restitution to victims and restitution to the IRS including penalties and interest total more than $320,000. Blythe will be sentenced in June 2014.
Reference: http://www.fbi.gov/sandiego/press-releases/2014/murietta-man-who-duped-struggling-homeowners-into-handing-over-their-homes-to-him-pleads-guilty-to-tax-and-bankruptcy-fraud
Former Construction Chief to Serve 15 Months in Prison for Tax and Bankruptcy Fraud
Robert “Jeff” Johnson, 46, was recently sentenced to 15 months in prison for fraud, along with being ordered by a federal judge to pay $1.6 million to the Internal Revenue Service (IRS) and a bank he defrauded.
Johnson was indicted on 12 counts in 2010 that included theft, larceny, obstruction of correspondence, falsification of records, and criminal contempt. As part of a plea deal, these charges were dropped. Last September,
Johnson pleaded guilty to willful failure to pay employee taxes, bank fraud, and bankruptcy fraud.
Johnson was a former chief of a Columbus, OH construction company that is now defunct. A lengthy investigation by the IRS led to his indictment. As president of Smith & Johnson Construction Co., he borrowed $20
million for the company, but instead of using it for business purposes he used it to support a posh lifestyle including a Miami Beach, Fla., condo and expensive vehicles.
The loan had enough collateral to cover it according to Johnson’s attorney, meaning the bank lost very little from the transaction. Johnson had been president for 3 years when the company folded in 2006 after being in operation for 20 years. The company had up 500 employees.
Johnson filed false documents and hid assets when he filed for bankruptcy. He withdrew over $1 million in taxes that he failed to pay to the IRS that was from employee wages. When the construction company folded and
a warrant was issued for his arrest, he hid from U.S. Marshals. He was apprehended later at his Florida home.
Some may recognize Johnson from the WE TV network show, Platinum Weddings, which highlights lavish expensive wedding celebrations. His wedding was featured in 2010 on a waterfront estate with a $600,000 price tag. Supposedly, his bride wore jewelry with an estimated worth of $400,000.
Delinquent Taxpayers to Pay Collection Fees
When it comes to paying taxes, the last thing we want are more fees. It is bad enough we need to deal with tax debt, but to have fees added on puts us even further in debt! While there are all sorts of different types of fees, out of the state of Oregon delinquent taxpayers will owe additional fees.
In next to no time, fees are to be charged to delinquent taxpayers in regards to tax debt collection. These fees are collected by firms tasked to gather taxes which are not paid, such as the fees of Oregon Department of Revenue. Delinquent taxpayers will be charged starting Saturday, October 1.
This may be able to be avoided however, not everyone will be able to pay up immediately. To avoid these fee collections, everyone who owes taxes are advised to pay in full prior to October 1. Around 200,000 taxpayers are being notified via mail sent by the department, which contains an announcement regarding these changes. Moreover, people who are not involved with private collection firms and cannot come up with enough money for paying debts in full may coordinate with the department for assistance. Of course, not everyone will be able to do so.
Within the state of Oregon, up to 67% of the overall tax balance may be charged by these private collection firms. The department has gathered about $415,000 during the previous year in fee collections.  Tax fees can become such a burden when you ware trying to pay off your tax debt because instead of lowering your debt, it continues to go up. Often times these fees simply unavoidable and we are obligated to find other ways in getting rid of our tax debt.
Find an Experienced Dallas Bankruptcy Attorney
Contact an experienced bankruptcy at Allmand Law to help ensure that any and all potentially dischargeable debts are eliminated.
The post Tax Relief Help appeared first on Allmand Law.



1 month 1 week ago

Tax Deductions You Don’t Want To Forget
Mortgage interest tax deduction

  1.  Property taxes – Combined with the new homebuyer tax credit this deduction can save many homeowners a lot on their taxes. You can add this deduction to your standard deduction if you don’t itemize, or if you choose, you can add it to you itemized deductions.
  2. Sales taxes – Tax law allows you to deduct your local and state sales taxes. I you purchased a big ticket item such as a car, boat or prefabricated home last year, you can add the taxes paid to your itemized tax return to take advantage of the deduction.
  3. New car deduction — If you purchased a new car (not used) in 2009 you may be able to deduct the state, local and excise taxes you paid for it.  You don’t need to itemize to take advantage of this deduction on your taxes.
  4. Donations To Haiti – If you make a donation to the Haiti earthquake relief efforts between January 11, 2010 and March 31, 2010 those donations can be deducted from your taxes, but only if you itemize.
  5. Energy efficiency credit – If you purchased an energy efficient air conditioner, furnace or water heater last year, you may be able to deduct 30 percent of the cost from your taxes. There is a $1500 cap; but you can include the cost for labor and materials. If you installed energy efficient window, insulation, sealant and radiant barriers you may also deduct 30 percent of the cost with a $1500 cap, but labor cannot be included.

Also remember, if you are unable to pay your taxes, you may be able to negotiate forbearance with the IRS.  Also, some taxes (depending on the age and other factors) may be dischargeable in bankruptcy.
Can I Stop the IRS from Collecting for Unpaid Taxes if I Can Not Pay?
The collection process can be stopped by resolving your liability.  If you receive a notice from the Internal Revenue Service (IRS) regarding tax debt , consider this your call to action.  It is common for taxpayers to ignore notices or think that it’s not a big deal.  The problem with ignoring IRS notices is that not only does your tax liability continue to increase with penalties and interest; collection actions against you become more aggressive and happen sooner than many realize.
Taxpayers are often quick to ignore notices when they know they are unable to pay what they owe.  The IRS has several options available for different financial situations.  The fastest way to stop collection action is to pay the amount due in full. If you’re not able to pay it as a lump sum, all at once, you may qualify for a payment plan that will stop collection action.
An installment plan allows taxpayers to pay what they owe in monthly installments and there are different plans based on what you owe and your finances.  After you apply and are approved for a plan, the collection action against you will end as long as you make payments as agreed.
If you are unable to pay anything toward the amount due, there are several options.  You can apply to be declared uncollectible due to financial hardship or apply for an offer in compromise.  Being declared uncollectible will temporarily suspend collection action until your situation improves and an offer in compromise allows you to make an offer on what you can pay; paying less than what is originally owed.
Getting Tax Debt Discharged in Bankruptcy: 4 Requirements Your Debt Must Meet
If you’re wondering whether you can get can tax debt eliminated in bankruptcy, you’ll need to review several factors to learn if your debt qualifies.  Chapter 7 and Chapter 13 bankruptcies may help you deal with your debt in different ways.  In order to understand your options in detail and learn if bankruptcy is an option to consider, review your situation with a bankruptcy attorney or tax expert.
Debtors are often confused about tax debt and bankruptcy, with many under the impression that you cannot discharge or eliminate tax debt.
Certain debts may qualify but it must follow a specific criteria:

  1. Tax debt should be accessed by the Internal Revenue Service (IRS) with 240 days of filing for protection.
  2. The tax return related to the outstanding debt was due at least 3 years before filing.
  3. Tax returns have been filed within the last two years.
  4. No tax evasion or fraud attempts were made by the debtor.

Chapter 7 bankruptcy can eliminate or offer IRS debt relief that meets necessary requirements.  Chapter 13 bankruptcy may help you deal with IRS debt relief that doesn’t qualify for discharge.  With Chapter 13 you may be able to repay what you owe without penalties or interest, making your payments more affordable. The 240 day assessment may vary if you had an offer in compromise pending. Specifications may also vary if you have a tax lien. You may need to provide proof of filing previous tax returns before filing your petition.
How Bankruptcy Can Offer IRS Debt Relief
Bankruptcy can help taxpayers deal with tax debt either by eliminating qualifying debt or creating an affordable monthly payment to put toward what you owe. Each bankruptcy chapter has regulations and requirements for handling tax obligations. In some cases you can get them discharged, if they don’t qualify for elimination, having them included in a repayment plan may be another option.
Handling IRS debt relief can be a struggle if you have other debt obligations such as credit card bills, medical bills, mortgage, car loan or even a wage garnishment. Bankruptcy may help you get in better financial shape to handle tax debt if the debt cannot be discharged or eliminated.
Chapter 7 bankruptcy can eliminate tax debt under specific circumstances. The taxes should be income taxes, at least 3 years old, be accessed by the IRS within 240 days of filing for bankruptcy, and your taxes should be filed and up-to-date. As long as tax fraud or evasion isn’t committed, you may be eligible to have the debt discharged.
Chapter 13 bankruptcy is another option if your tax debt is not eligible for elimination. This is a 3 to 5 year repayment plan approved by the court based on your ability to repay. At this point, the IRS has to accept your payment. This is often an option for debtors who have been unable to set a payment arrangement with the IRS on their own or need legal enforcement.
Reference:
http://www.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html
Can I Discharge Taxes In Bankruptcy?
There are certain circumstances where a debtor may be able to discharge their federal or state taxes partially or in full during.  But taxes are usually treated as a priority debt during bankruptcy, what this means is that tax debts will be paid before certain other debts.  For example, if a debtor owed federal taxes, the bankruptcy court would repay those federal taxes before the debtor’s mortgage or car note. However, there are times when tax debt is classified as non-priority debt.  If a tax was incurred within the 3 years prior to the debtor filing for bankruptcy, then those taxes must be repaid 100 percent during the bankruptcy.
However, if the tax debts were incurred more than 3 years before filing for bankruptcy, the debts will be categorized as a non-priority debt.  Under certain circumstances, a debtor may be able to discharge non-priority tax debt during bankruptcy.  Sometimes bankruptcy courts will discharge non-priority tax debt during bankruptcy if the debtor simply is unable to repay the tax debt AND  maintain reasonable living conditions.
For example, if a debtor is permanently disabled and experienced a significant drop in income the bankruptcy court may be willing to partially and even fully discharge tax debt in bankruptcy.  However, if a debtor has failed to pay their taxes or has attempted to evade paying their taxes, the bankruptcy court may not discharge their tax debt in bankruptcy.  And if the tax debt is classified as a priority debt, then the debtor is required to repay those taxes no matter what their circumstances are during the bankruptcy.
Does Discharged Debt from Bankruptcy Get Reported on Federal Income Taxes?
During tax season the question often arises regarding discharged debt and whether it has to be claimed as income on federal income taxes. This widely depends on whether the creditor acknowledges discharged debt as
being canceled debt. If this is the case debtors may receive a 1099c form from the creditor to include when they file their return. In many cases debtors will not have to worry about this, but this is something you can
review with your bankruptcy attorney for further clarification on exceptions to the rule.
Income recorded on federal income taxes often does not include discharged debt from bankruptcy. The IRS may provide more information for clarity on your unique situation. This is true for any bankruptcy chapter filed
including Chapter 7 , 11 and Chapter 13. The debt has to be successfully discharged, meaning if you filed for protection and your case was dismissed before the debt could be discharged, the exception may not apply.
In some cases if you were declared insolvent you may not have to worry about reporting anything on your federal income tax return. In short, this is where it is proved that what you owed debt wise was valued more
than the value of your assets at fair market value, including items with a lien or those that may be considered exempt under the bankruptcy code. The Internal Revenue Service (IRS) has additional information on this
matter you can review via publication p4681.
Reference:
http://www.txbankruptcyblog.com/2014/02/articles/bankruptcy-news/cancelled-debt-1099c/
Tax Liens And Bankruptcy
Debtors with delinquent tax debt often worry about IRS tax liens during bankruptcy.
1.    Tax liens survive the bankruptcy discharge.
2.    The tax liens that survive the bankruptcy discharge only apply to pre-bankruptcy property.
For example, if a debtor filing for bankruptcy has a tax lien on an old car that’s worth $1500, and the debtor sells the car, the IRS would be able to seize the proceeds. However, if the debtor purchased a car after bankruptcy worth $3,000, then sold it, the IRS would not be able to seize the money earned from that sale.  If you are considering bankruptcy and have tax liens on your assets speak with a bankruptcy attorney about your options. A qualified bankruptcy attorney can help you create a plan on how to handle tax or other liens against your assets during bankruptcy.
What Happens to a Tax Lien When Bankruptcy is Filed?
When you file bankruptcy, the automatic stay goes into effect which stops collection attempts from creditors. Yet, this may have a different effect on a tax lien depending on your situation. A tax lien is when a taxing authority, such as the Internal Revenue Service (IRS) or state government, places a lien on your property for failing to pay outstanding taxes due.
The lien allows the taxing authority to use your property to satisfy taxes due after selling your property. You may have a lien placed on the property in question if you owe property taxes. Or, the taxing authority who is
owed taxes may take additional steps to get a lien if you owe state or federal income taxes. When it comes to bankruptcy, you may need to determine whether the tax debt in question qualifies for discharge.
This can be complex situation depending on what type of tax debt you owe, how old the debt is, and when you file your petition. In some cases, you may file for protection before the lien is issued against you. In this
case, if a lien is issued it violates the automatic stay. Tax debt may be eligible for discharge but it depends on whether it meets qualifications according to the bankruptcy code. Getting the debt wiped out in bankruptcy
may depend on when it was due and whether it has been accessed by the IRS. Discuss your situation with an experienced Dallas-Fort Worth bankruptcy attorney.
Reference:
http://www.nolo.com/legal-encyclopedia/does-bankruptcys-automatic-stay-apply-tax-liens.html
What You Should Know About Tax Refunds and Bankruptcy
Tax season often raises questions about what will happen to a tax refund if bankruptcy is filed. This can be the best time to discuss your questions and concerns with an experienced bankruptcy attorney. In many cases it is about timing depending on your unique situation. It may be best for you to postpone your filing until after you have received and spent your refund. For others you may be able to keep it upon filing depending on several factors.
The following points are a areas to consider when understanding your options regarding your tax refund and bankruptcy:

  • Your tax refund may be considered part of your bankruptcy estate. There may be exemptions available depending on your state that can help protect it if it is considered an asset.
  • If you plan to spend your refund before filing and use it toward necessities such as mortgage/rent payments, vehicle payments, and other household needs.You can review expenses and purchases you want to make prior to filing with your attorney to ensure they are qualified expenses.
  • You may be able to keep a portion of your refund depending on exceptions to the rule. This may also apply to those who may have filed a previous bankruptcy in the past.
  • Review with your attorney about transactions to avoid with your refund that could raise a problem in your bankruptcy.
  • Making payments to certain creditors such as a family member you owed money to could result in the court requesting the payment to be turned over to the court.

What You Should Do with Your Tax Refund If You Plan to File Bankruptcy
If you are expecting to receive a tax refund before filing bankruptcy you may be able to spend it wisely without causing legal headaches. There are a few actions to consider when it comes to using your refund before
you file and this includes reviewing your intentions with your bankruptcy attorney. You can get further insight on how to use your refund safely to reduce the risk of having purchases scrutinized by the court.
This is important since there have been a large number of debtors filing before receiving their refund. Tax refund payments may be considered part of your bankruptcy estate. They could be used to satisfy creditors and
because of this, in some cases, you may be better off waiting until it is spent before filing for protection.
How to safely use your refund:

  • Use your refund with guidance from your bankruptcy attorney. This can help you get exemptions necessary that can help you keep your refund while establishing financial control even after your case is completed.
  • Bankruptcy filing fees: you may be able to use your refund to pay for necessary expenses such as retaining an attorney, credit counseling and financial management courses, and filing fees. These are expenses you can review with your attorney.
  • Making necessary payments and expenses: food, clothes, medications, and repairs to your home or vehicle may be purchases you can make with your refund. You may be able to catch up on other payments such as utilities, mortgage or the rent.

Reference:
http://www.txbankruptcyblog.com/2014/02/articles/debt-relief/how-to-spend-tax-refund-money-before-bankruptcy/
If I File My Taxes Late Can I Still File for Bankruptcy?
Even if you file your taxes late you can still file bankruptcy. When you begin the filing process you are required to provide documentation about your finances, debt, and monthly income. Your tax returns are necessary
for a matter of reasons.
Tax returns, including federal and state tax information, should be accurate for verification purposes. When you file you are required to include information for the most recent tax year. Even if you file for an extension to submit your return after the April 15 deadline, your return should be completed and filed. If your taxes are not filed before the creditor’s meeting occurs your case could get dismissed.
Having your returns filed helps accurately determine your budget and repayment options. Whether you file Chapter 7 or Chapter 13 bankruptcy, you may not have a clear idea on what debt is owed or how you can repay
it unless your tax information is completed. In many cases, the Internal Revenue Service (IRS) may complete a return on your behalf to estimate potential taxes owed until you file the return. If this occurs it could
lead to higher Chapter 13 payments due to tax returns that have not been assessed or filed.
When you complete your returns it is important to report information accurately as it will be reviewed when bankruptcy is filed. Any problems could delay the bankruptcy court from discharging debt. Discuss you tax debt concerns with your bankruptcy attorney in Dallas-Fort Worth.
Reference:
http://www.duncanlawonline.com/do-my-taxes-have-to-be-filed-before-filing-for-bankruptcy/
Four Tax Tips For A Troubled Economy
1. Write Off Property Sale Losses
If you experienced a foreclosure , deed-in-lieu of sale, mortgage-loan modification or a short sale and had debt forgiven, you need to know that the Mortgage Forgiveness Debt Relief Act of 2007 will treat any forgiven debt as taxable income. But in an effort to aid people during the credit crisis, Congress allowed homeowners with mortgage debt forgiven in 2007, 2008 and 2009 to avoid this tax.
The Mortgage Forgiveness Debt Relief Act of 2007 was suppose to prevent homeowners who experienced foreclosure from receiving a huge tax bill on forgiven debt caused by the foreclosure. But to many homeowners’ surprise the law doesn’t protect all homeowners who have lost their property to foreclosure. Under the Mortgage Forgiveness Debt Relief Act, the tax liability incurred from the foreclosure will be waived only if the debt was accrued from buying or improving the property.
Sounds simple enough, right? Not so fast. Remember all of those home equity loans and refinances that required homeowners to roll their credit card debt into their mortgage? Well, that is taxable. So if you refinanced your $100,000 home for $140,000 and rolled $20,000 of credit card debt into the refinance, after your home is foreclosed on you will still owe taxes on that $20,000. For those homeowners who have suffered from foreclosure, paying any type of tax is a huge blow, especially on a home they no longer own. The only way that a foreclosed homeowner can avoid this tax liability is to file for bankruptcy.
But the law states that the taxpayer must be insolvent at the time of the foreclosure or the foreclosure must occur after or during the bankruptcy in order to have the tax waived. That means if a debtor has retirement funds or any other assets at the time of the bankruptcy, they might still be stuck with the tax debt caused by the foreclosure
2. Write-Off Losses From Selling Stock
If you experience a financial loss this year from selling stocks or other property you can use the loss to offset capital gains from other property or stock sales. Losses exceed capital gains? You can apply as much as $3,000 of the additional losses toward ordinary income. Any amount above $3,000 can be placed on future tax returns.
3. Write-Off Work Related Expenses
There are many expenses employees incur that are not covered by their employer. You can deduct these excess expenses on your tax return if they exceed more than 2% of your income.
4. Write-Off Business Equipment
If you have a business, you can write off the cost or depreciation of certain business purchases, such as business furniture, machinery, office equipment and laptops.
Unemployment, Taxes and You
If you’re unemployed during this recession, several factors may greatly impact your tax liability. For unemployed workers who received unemployment insurance benefits, the IRS will tax all benefits after the first $2400.  If taxes were not automatically withdrawn from your unemployment benefits check you could end up being liable for hundreds, if not thousands of dollars in taxes.
Here’s what you need to know about reducing your tax liability and/or deferring payment as an unemployed person:

  • If you are searching for a job, gather all of your job search related receipts. You may be able to deduct expenses for items such as parking fees, resume services and even long distance phone calls and travel expenses related to searching for work.
  • If you owe taxes on your 2009 income, you may be allowed to defer payment if you are unemployed.  Unemployed taxpayers are often able to receive what’s called “uncollectible status” if they do not earn enough income to pay their taxes or if paying their taxes would jeopardize their basic living standards.

It’s important that unemployed taxpayers take the time to consultant a tax accountant who can help them navigate the system.
Texas Residents Can Now Deduct Sales Taxes On Federal Income Tax Returns
According to an article in the Star-Telegram, Congress made permanent a tax law that allows Texas residents to deduct state and local sales taxes from their federal income tax returns.
The article said:
In 2004, Congress approved the provision allowing taxpayers who itemize to deduct either their state income tax or their state and local sales tax expenses, and it has been extended on a one- or two-year basis ever since. It was due to expire after the 2009 tax year. Deduction of sales taxes had originally been eliminated in the Tax Reform Act of 1986.
The new tax law will save Texans millions of dollars in taxes and will go a long way in easing the financial strain of those who are already struggling with financial issues. Taxes are becoming more of a burden to Americans as they are forced to face job losses, foreclosures and reduced wages. Before 2004 many Texans missed out on the federal tax savings that most other Americans enjoyed because they were not allowed to deduct sales taxes. Luckily for Texas, that’s changed now. If you have not filed your taxes this year, please don’t forget to take advantage of this tax deduction when you file. If you are delaying the filing of your federal tax returns because you owe money and don’t have the income to pay, you may qualify for a payment plan. Visit www.irs.govfor more information on your payment plan options.
According to an article in the Wall Street Journal, the Obama administration has created a new program to encourage mortgage lenders to modify a second mortgage in its efforts to reduce foreclosures. Under the new foreclosure prevention program, the government will pay mortgage lenders $500 up front and $250 a year for three years for each second mortgage they successfully modify, such as a home equity loan.
The article said:
According to the U.S. Treasury Department, up to 50% of at-risk mortgages have second liens and many properties in foreclosure have more than one lien. Senior administration officials Tuesday told reporters they expect a significant amount of big banks to sign up for the updated federal program to bring relief to troubled homeowners.
Isn’t that what they said about Hope For Homeowners and the other foreclosure abatement programs that have been unsuccessful? Our government is spending another few billion on a program to pay mortgage lenders to help homeowners avoid foreclosure, the same mortgage lenders who created the foreclosure crisis. It is in the best interests of mortgage lenders to avoid foreclosure , so why do they need to basically bribed into acting in their own best interests? I really am beginning to believe that there are some government officials who are not taking this foreclosure crisis serious. Maybe they don’t realize that these are real lives that this foreclosure crisis is destroying. We will keep a close watch on how “successful” this particular foreclosure prevention program is in stopping foreclosures. Because the bottom line is that we aren’t stopping foreclosure if the numbers are steadily increasing.
IRS May Require Tax Preparers To Get Licensed
According to an article in the Star-Telegram, the IRS is considering new rules that require tax preparers to be licensed in hopes of reducing fraud and tax preparation errors.
The article quoted IRS Commissioner Doug Shulman:
Shulman said he wants better leverage to make sure tax preparers act ethically, not only to improve enforcement, but to ensure that taxpayers get quality help in preparing their returns.
“Paying taxes is one of the largest financial transactions individual Americans have each year, and we need to make sure that professionals who serve them are ethical and ensure the right amount of tax is paid,” Shulman told the House Ways and Means Subcommittee on Oversight.
Currently tax preparers aren’t required to be licensed unless they plan to represent taxpayers in proceedings with the IRS.  And although using a tax preparer is relatively inexpensive compared to a tax accountant, many unscrupulous tax preparers have taken advantage of low income taxpayers, according to the article.   Since 2006, 356 tax preparers were convicted of fraud with over 80 percent of them going to prison.  These convictions don’t just create problems for the tax preparers; it’s their clients who end up paying the additional taxes, interest and penalties.
Yes, tax season is behind us; but it’s worth reminding taxpayers that you are ultimately responsible for information submitted on your tax return.  Make sure you work with an experienced tax professional when filing your taxes, even if they’re late and you owe money.  Remember, if you owe back taxes, you may be able to discharge these taxes in Chapter 7 bankruptcy or repay them in a Chapter 13 bankruptcy .  To find out more about how bankruptcy can help you get a handle on your taxes contact a Dallas-Fort Worth bankruptcy attorney today.
Many Jobless Americans Facing Heavy Tax Burden
According to an article in the Star-Telegram, many unemployed Americans are facing unexpected tax bills because they don’t fully realize the amount of taxes they will owe on their unemployment benefits.
The article said:
At a time when the newly laid-off are swelling unemployment rolls to record numbers, the painful surprise for many is that jobless benefits are taxed like income. That leaves many on the hook for hundreds or thousands of dollars because the taxes aren’t automatically withheld from benefit checks. To make things worse, some people are also hit with a state unemployment tax bill.
American unemployment benefits have been fully taxable since 1987; but the impact on those who have faced a job loss has been great. Many jobless Americans are facing a steep tax bill this year because of state and federal taxes on their unemployment benefits–and they’re not prepared.
The article quoted a business systems analyst:
“I knew I’d have to pay something, but to think I was going to get gouged $1,500 for three months’ unemployment,” he said. “What if I was out the whole year?”
Taxing unemployed workers receiving unemployment benefits is like squeezing blood from a turnip and is completely counterproductive. Unemployed Americans can barely survive on unemployment benefits that range from a minuscule $400 – $1600 a month depending on where they live and their previous income.
Luckily President Obama’s stimulus package includes provisions that make unemployment benefits tax-free up to the first $2,400 of benefits received. This is a temporary, one-time measure that may give jobless Americans a bit of breathing room; but not much. What we really need is a law that makes unemployment benefits completely tax-free so that the unemployed are not going deeper into the whole with tax debt .
Mistaken Tax Debt Plus Credit Card Does Not Equal Nondischargeable Debt
In the Chapter 7 bankruptcy case of Rollings, Joseph W. and Janet S.; In re (Chase Manhattan Bank, USA, v. Rollings) the bankruptcy court ruled that credit card debt incurred because debtors used the credit card to pay a IRS bill that they mistakenly believed they owed was not nondischargeable.
The details of the bankruptcy case:
The Chapter 7 debtor and her husband be¬lieved that they owed $2,267 in federal income taxes. They paid this amount using a cash advance from the debtor’s credit card. Shortly after they filed for bankruptcy, the IRS informed the couple that they were entitled to a refund of $2,793 because they failed to claim an Earned Income Credit. The credit card company asserted that its claim was nondischargeable pursuant to Section 523(a)(14) because the debtor used a cash advance to pay a tax liability. The court, however, found that the debt was not “incurred to pay a tax … that would be nondischargeable” as stated in the statute. Consequently, the debtor could discharge the debt.
The court also found that simply because a debtor files a tax return stating that they owe the United States government money does not in and of itself prove that there is actually such a liability. Debtors considering bankruptcy should also note that federal and state income taxes are dischargeable in bankruptcy under certain circumstances and according to how old the tax debt is at the time of filing bankruptcy. If you have old tax debt that you would like to include in a Chapter 7 bankruptcy, speak with a Dallas-Fort Worth bankruptcy attorney today about your options.
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The post IRS Debt Relief appeared first on Allmand Law.



1 month 1 week ago

Getting Rid of Back Taxes in Bankruptcy and What You Should Know
Back Taxes in Bankruptcy
Bankruptcy can help you eliminate back income taxes depending on your situation and qualifications. You can file Chapter 7 bankruptcy to discharge tax debt that qualifies under the bankruptcy code. If your debt does not meet these qualifications, you may consider Chapter 13 bankruptcy to help you repay what you owe based on your income ability.
While it is important to review your situation with a qualified tax professional or bankruptcy attorney to learn how you may qualify, the following points are few things you should know about eliminating back taxes in bankruptcy:

  • To discharge tax debt in Chapter 7 the debt should have been due three years prior to filing. This includes extensions you may have received during this time.
  • Prior to filing your returns should be filed, even past due taxes roughly two years before bankruptcy.
  • The Internal Revenue Service (IRS) must assess the debt at least 240 days before you file your case. The 240-day period may vary depending on any events that may have occurred during the time period.
  • Tax returns may not be considered fraudulent; information provided should be true. Tax evasion should not have been attempted.
  • Even if tax debt meets requirements under the bankruptcy code it will not be discharged unless back taxes have been filed. A substitute return, sometimes completed by the IRS when the taxpayer does not submit a recent
    return, does not count.

You can review your tax debt with an expert to review your options, including Chapter 13 bankruptcy which helps reorganize debt obligations based on your ability to make monthly payments.
Unpaid Taxes: Understanding the IRS Collection Process
Failing to file an income tax return or filing but failing to pay what is due may prompt the Internal Revenue Service (IRS) to begin the collection process.  A tax bill, CP-14, is sent to a taxpayer which begins the process.  The IRS has been known to increase their collection efforts soon after the bill is sent. They will continue efforts until the tax debt is paid in full.
The bill sent to taxpayers who owe will provide information regarding the amount due and penalties and interest accrued.  There may be several other notices to follow if payment isn’t received after the initial notice was sent to you.  The notices also provide information on where payments can be sent.  If you’re not able to pay off what you owe in full, you should make an attempt to submit smaller payments.
Failing to pay after several notices have been sent will make collection actions more aggressive.  A notice will be sent regarding further collection set to be taken against you.
There are 3 main collection methods the IRS may look to enforce:

  • Tax lien against personal property.
  • Tax levy that may have personal property seized.
  • Refund offset.

In many cases, the IRS will look to place a levy on a bank account or wages; also known as IRS wage garnishment .  If you are owed a refund, they may look to subtract what you owe from it.  It is also possible for your entire refund to go toward the liability amount owed.
Why is Important to File a Federal Income Tax Return Even if it is Late?
Why is Important to File a Federal Income Tax Return Even if it is Late?
If you voluntarily file back income taxes the consequences for filing late fail in comparison to having the Internal Revenue Service (IRS) pursue you for outstanding taxes.  The longer you wait to file unfiled taxes it’s likely you’ll pay more in penalties and interests.  This reason alone should be enough for taxpayers who haven’t filed previous returns to get them submitted but unfiled returns for a lengthy period of time could lead to extensive tax debt .
If you owe taxes, penalties and interest will continue to accrue until the amount is paid off or paid in full.  There is a possibility the IRS may file a return for you; also known as a substitute return.  When the IRS completes a substitute income tax return, they often don’t include credits or deductions that may lower your amount or increase your refund if you are due for one.
If a substitute return is completed, they may begin collecting outstanding taxes due based on this return. They may look to place a lien or levy against personal property.  If they complete a return you still have an opportunity to complete unfiled returns with deductions and credits applied.  If you voluntarily file, you may be eligible for a payment plan to resolve your debt and possibly settle for less than what is owed.
If the IRS catches up with you about unfiled or unpaid taxes, depending on the amount owed and how long you continue to fail in filing or submission of payment, it could be considered tax evasion, lead to a hefty fines or even prison time.  Review questions or concerns with a tax attorney or tax expert.
Late Income Tax Filers Beware Of Unscrupulous Preparers
You may be tempted to rush around to any tax preparer to file at the last minute or even a few days late, but beware of unscrupulous tax preparers who may file false information on your return.
An article in the Dallas Morning News, offers a story that should serve as a warning when choosing your tax preparer.
The article said:
Joyce Marie Simmons went from running a Snow Cone stand to becoming the tax-refund queen of Polytechnic Heights, acquiring a newly built strip center valued at $860,000 and driving a $78,000 BMW 760 Li.
Before the April 15 tax filing deadline in past years, local business owners watched wide-eyed as last-minute filers spilled out the door of Simmons’ Diamond Tax and Notary Service at 2812 Miller Ave., circling the building. Meanwhile, the customer flow was lax at three rival tax-preparation offices nearby. The secret of Simmons’ success?
From 2003 through 2005, federal authorities say, her clients received windfalls from deductions and tax credits by claiming that they operated enterprises they didn’t own and running up phony business expenses. They declared themselves the parents or guardians of bogus dependent children that inflated their exemptions, and Simmons, the government says, supplied the names, at times buying them from homeless people along with Social Security numbers.
Okay, there are a few things to note here, 1) there were lots of last-minute filers falling victim to this tax scammer. When you wait to the last minute you can become more vulnerable to tax scams so keep extra alert. Number 2) most of these taxpayers were probably surprised with their “windfalls” especially if they owed money in past years.
If you received a huge windfall when you were expecting to pay out to Uncle Sam, expect foul play and get a second opinion. Number 3) tax preparers in Texas ARE NOT required to undergo licensing or certification, a matter of fact they don’t even need to register with state or federal tax agencies. That means there is little oversight and regulation on “kitchen counter” tax preparers, so if you can afford it you may want to work with a tax accountant.
Two Sources For Free Tax Assistance
Are you delaying filing your taxes because of a lack of money?
Resources you can use to file your taxes for free:

  1. AARP Tax-Aide – Despite what the name may suggest, this program is not just for senior citizens.  AARP Tax-Aide is available for all taxpayers of all ages and income levels. Local volunteers who are trained in tax preparation and certified by the IRS will file your taxes for free.  Call 888-227-7669 to find locations and make an appointment.  Or, you can visit here  and submit a tax question online.
  2. VITA – VITA is a tax preparation service that helps families earning $49,000 a year or less and military servicemembers file their taxes.    This tax service is free and available in both English and Spanish. No appointment is necessary; but you can call 800-829-1040 or a 211 operator to find locations and times the tax service is available.

And of course you can always go to www.irs.gov and file your taxes using their online system or one of their printable forms.  The IRS website includes a ton of free and useful information for filing your taxes.  Remember, if you file your tax return electronically and use automatic deposit, your tax refund could be deposited into your account in as little as 10 days.
So if you are tempted to take out a tax refund loan, just remember that you could get your refund in as little as 2 weeks without the loan.  Also, if you owe taxes and are unable to pay, you can still file your taxes now, as long as your pay by April 15, 2010 you can avoid a penalty.  You can also request an extension for filing or paying your taxes.
Common Questions about Unfiled Income Tax Returns
Back income taxes result from not filing a return.  While it’s best to file on time each year, you’re better off filing a return late than not at all.  Dealing with income taxes is something many taxpayers try to avoid but ignoring your liability can make the situation more challenging.  The Internal Revenue Service (IRS) has various options to help those settle tax debt from back taxes and it’s fairly common for those who owe to have questions about how to proceed.
The following questions may help you get started in getting your liability resolved:
What happens if I forget to file a federal income tax return?
It’s important to still file a return for the tax year in question.  Filing may help you avoid serious trouble with the IRS.
The Internal Revenue Service (IRS) often imposes stiff penalties for unfiled returns.  Many taxpayers don’t realize that the IRS has ways of learning about income and other financial information when taxpayers fail to file.  Most often, a federal income tax return won’t be filed if a taxpayer cannot afford to pay the liability.  Since the IRS has solutions for those who are able and unable to pay, serious consequences may result if you fail to file.
If you owe income tax you may end up paying additional penalty fees and interest.  Even if you are unable to pay what is owed, the IRS has several options and is willing to work with you to resolve tax debt . In some cases, IRS wage garnishment may be enforced but many claim the IRS rather work with you to determine a solution verses garnishing wages.
If you purposely fail to file and owe quite a bit in taxes, it may be seen as tax evasion in which the IRS imposes hefty fines and even prison time.
While going to jail is often rare, it is possible. Most common consequences for unfiled or back income taxes include:

  • Failure to file penalty that may accrue interest fees.  The longer you wait to file, the more you will owe.
  • Losing a tax refund you were eligible for.  If you are due to obtain a refund, you may not be penalized for filing late but you have three years to submit a completed return that shows you are entitled to receive it.
  • Statute of limitations is affected.  You have 3 years to claim a refund and after that, the IRS isn’t obligated to issue one.  Collection of back taxes start when a return is filed.

How do I determine how much is owed?
Filing back returns will help you in understanding your liability.  There are other options to discuss with a tax expert to help you determine how much you owe.
What happens if I can’t pay what I owe?
The IRS has multiple options available that will allow you to make payments on your liability.
Is it possible to settle my taxes for less than what is owed?
Qualifying taxpayers may be able to settle with the IRS through different options such as penalty abatement and offer in compromise to settle at a reduced amount.
I received a notice for intent to levy from the IRS.  What should I do?
When no attempt is made on your part to pay taxes, the IRS will at placing a levy on your wages or bank account.  Contact the IRS and learn about options available to keep the levy from proceeding.
Should I handle back taxes on my own or with a professional?
This is a personal choice but even if you decide to file back taxes on your own, a tax attorney or tax expert can answer questions or concerns about your situation.
Tax Tips and Tricks for Homeowners
When it comes tax time, knowing what is rightfully yours to claim is crucial. That is why it is important to know tax essentials before tax time comes around instead of during. Since there are all sorts of rules that apply to different areas, such as if you have children, if you own a home, and so on, you need to know what applies to your situation. If you do own a home and you want to get the most reductions out of it, here are some of those essential tips and tricks you’re going to need to know.
Itemize Return to Claim Deduction
Unfortunately, about 40% of homeowners will miss out on a major tax advantage when they fail to itemize their income taxes. If you have a home and somewhat of a simple return, it can be tempting to take just the standard deduction but, it could be that your homeowners deductions are more beneficial to you.
The Home Office Deduction
The average home office deduction is about $3,500 according to the Small Business Administration. If you take that number and then multiply that by your tax deduction bracket that is how much you may be able to save. Don’t forget to take advantage of your home office and deduct the appropriate taxes.
Closing Costs
If you happened to have purchased or refinanced your home in the last year, don’t forget about those expensive closing costs. On your return you can also include those fees and discount points that were paid when you closed or refinanced. Actually, even if the seller paid your closing costs, it is still tax deductible.
Tax Relief
It is also important to note that the IRS is not currently charging for taxes for the Cancellation of Debt Income through a short sale, loan modification, or foreclosure .  Unless this changes, which is under the Mortgage Debt Forgiveness Relief Act of 2007, this is important to keep in mind come tax time.
Why You Shouldn’t Pay Your Taxes With A Credit Card
Federal and state tax authorities encourage taxpayers to pay their taxes with credit cards; but doing so may not be in the best interest of the debtor.
Here’s why:
The interest rates on credit cards are typically higher than the interest charged by the state or tax authorities. Once you charge your taxes to a credit card, unless you plan to repay the debt immediately, you could incur charges that are eventually equal to or even exceeds the amount of your original tax debt .
Believe it or not, the federal and state tax authorities are more flexible than credit card lenders. If you need more time to repay your taxes, both state tax authorities and the IRS are often willing to setup payment arrangements. Oftentimes you can repay your taxes over a period of two to three years if needed. Credit card companies will also allow you to repay the debt overtime but not without a high cost attached.
Tax authorities are able to place your account in uncollectable status if you are unable to pay due to illness, job loss or other issues. What that means is that they will freeze all collection activity until you are able to repay the amount. They will usually give you at least 6 months before they check in with you to find out if your financial situation has improved.
If you file Chapter 7 bankruptcy at a later date, you may not be able to discharge the credit card amount comprised of the taxes if those taxes would not have otherwise been dischargeable in bankruptcy. Please check with your bankruptcy attorney to discuss your particular circumstances.

  1. You will end up paying more.  Yes paying your taxes late will result in interest and penalty fees; but that won’t be nearly as much as the interest you will pay on a credit card.  Compared to credit card interest rates, the interest rates for both state and federal taxes are miniscule.
  2. You have more payment options with the taxing authorities.  While the IRS and other taxing authorities will try to convince you to pay your taxes with a credit card, don’t be pressured into taking on new credit card debt.  You are not required to take on credit card debt to pay taxes even if you have the credit available.  Take advantage of the numerous payment arrangements available through the IRS and other tax authorities.
  3. If you decide to file bankruptcy after paying for your taxes with a credit card, you may not be able to discharge that portion of the credit card debt in bankruptcy. The bankruptcy code prohibits the discharge of debts incurred to pay taxes if those taxes would not have otherwise been wiped out.  In other words, if you charged your taxes to a credit card this year and filed for bankruptcy a year later, you would not be able to discharge that debt in Chapter 7 bankruptcy.

Three Tax Myths That Could Land You In Trouble With The IRS
Around tax time a lot of myths get thrown about online and offline. If you want to stay out of trouble with the IRS and get your tax situation done correctly take a look at some of the most common but nonetheless untrue tax myths out there:

  1. Money earned online is tax-free. Whether you earn money online or offline, all revenue is taxable by the IRS and must be reported to the IRS on your income tax filing.  One of the biggest victims of this tax myth are entrepreneurs who finding more of their business online than before.  Do yourself a favor and take the time to carefully document and report all revenue earned online and offline to the IRS at tax time.
  2. If you barter, you don’t have to pay taxes.  While it is true that no money changes hands during a barter exchange, the value of the barter is taxable by the IRS for both sides.  For example, if you bartered services valued at $100 with someone who was giving you services also worth $100, you both would need to pay taxes on the $100 worth of value you received.
  3. Under-age workers don’t have to pay taxes.  All singles under age 65 with $9,350 in gross income in 2009 must file a return, as well as those 65 and older with income of $10,750 or more. Self-employed individuals with incomes of $400 or more regardless of their age must also file a tax return.

I Received A 1099 For My Forgiven Debt…Do I Have To Pay Taxes?
If you receive a 1099 for canceled or forgiven debt, you may be required to pay taxes on that debt.
Here’s what you need to know:

  1. If your credit card company wrote off your debt because it was uncollectible after a certain amount of time, you may be required to pay taxes on the debt.
  2. If your home was sold in foreclosure but had a deficit balance on the mortgage which was forgiven by the mortgage company you may need to pay taxes to the IRS on the forgiven portion of that debt.
  3. The same rule could apply for other types of debts which are written off and reported to the IRS.  Any portion of the debt that was forgiven is taxable under the current tax laws.  The IRS requires that all banks and financial institutions report any canceled or forgiven debt to them because they consider it income.
  4. If your debts were forgiven in Chapter 7 bankruptcy or Chapter 13 bankruptcy , you DO NOT need to pay taxes to the IRS on the forgiven debt. Debts canceled or forgiven in bankruptcy are not taxable.  However, sometimes a creditor will still issue a 1099 for a canceled debt. If you receive a 1099 for a debt that was discharged in you bankruptcy, you need to fill out the IRS Form 982.  The form is complicated but an experienced tax accountant can fill it out for you and make sure that you are not taxed on debt which was discharged in bankruptcy.

 
The post Back Taxes Help appeared first on Allmand Law.



1 month 1 week ago

TheMarch 2019 New York City Taxi & Limousine Commission (TLC) sales resultshave been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers fell from February. In March, there were 38 unrestricted taxi medallion sales.
2. 28 of the 38 sales were foreclosure sales (74%), which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. One sale was an individual to an LLC and two sales were an estate sale. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).
3. The large volume of foreclosure sales (approximately 74%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The seven regular sales for consideration ranged from a low of $135,000 to $310,000 (three medallions) to $340,000 (one medallion) and a high of $350,000 (two medallions).
5.  The fact that 74% of all transfers in March 2019 were foreclosure sales shows continued weakness in the taxi medallion market and no sign of a correction.
6. At Shenwick & Associates we believe that the value of a medallion is approximately $160,000 and the value of medallions continues to weaken.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at jshenwick@gmail.com.


1 month 1 week ago

In the U.S., healthcare has become increasingly costly over the years. Your medical bills and overall debt can pile up quickly depending on the specific circumstances surrounding your situation. After receiving medical care, you may wonder how you will be able to pay off your sky-high bills. The worst thing you can possibly do is […]
The post Can You Discharge Medical Bills with Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..


1 month 2 weeks ago

A common misconception is that irresponsible people are the ones who usually file for bankruptcy. However, nothing could be farther from the truth. While it is true that bad budgeting or overspending may be attributed to being irresponsible, managing money is harder than ever thanks to inflation. Thus, a combination of bad budgeting and a habit of spending too much money can cause your debt to skyrocket and lead you to bankruptcy a lot faster than ever expected. But, then again, there are times that overwhelming debts may have been a result of life-changing events that you have no control over. We, at Northwest Debt Relief Law Firm, are here to take off the wool over your eyes and enlighten you about the realities of bankruptcy.
It is unfair to be prejudiced against another person who files for bankruptcy, to judge that he or she was irresponsible. Why? Because there are many other causes of bankruptcy. Some of them totally unexpected and not of their fault. The following are just some of the common ones:
➤Medical expenses
A study done by Harvard University indicates that the leading cause of bankruptcy is due to medical expenses. These expenses account for a whopping 62 percent of all reported personal bankruptcies. The study also showed that 78% of filers had some form of health insurance, thus bucking the myth that medical bills affect only the uninsured. Rare or serious diseases or injuries can easily result in hundreds of thousands of dollars in medical bills – staggering amounts that can quickly wipe out life savings and retirement accounts, college education funds and home equity. Bankruptcy may be the only way out when they are left almost penniless, regardless of whether the patient or his or her family had health insurance to cover a portion of the bill or not.
➤Reduction in Income
There may be times that some companies also have to cut costs to keep the company afloat. In such instances, this may mean employees putting up with pay cuts and bonus reductions.
➤Job loss
Losing your job, whether through layoff, termination, or resignation equates to the loss of income. This may mean challenging times ahead especially if you have not been able to set aside enough funds to tide you over to the next job. While some people may be able to receive severance packages, others are not as lucky with finding pink slips on their desk without any prior notice. An emergency fund will have been helpful. Otherwise, you will have no choice but to use your credit cards to pay off bills and this move could entrap you in debts with no clear indication on whether you can pay them off later on. The loss of insurance coverage and the cost of COBRA insurance also drain the job seeker’s already limited resources. People who are not able to find similar gainful employment for a long period of time may find it challenging to recover in time to pay off creditors.
➤Divorce or separation
Marital dissolutions result in dreadful blows on the finances of both parties. They need to deal with legal fees, which may cost a lot of money.  They also need to deal with the division of marital assets, paying off child support and/or alimony, and finally the ongoing cost of keeping up two separate households after the split. The mounting costs of legal representation are enough to force some people to file for bankruptcy, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the rest of their bills. Spouses who fail to pay the support dictated in the agreement often leave the other completely destitute.
➤Excessive use of credit
Credit companies are aggressive in selling their credit cards, mortgages, and other forms of consumer debt. However, credit card bills, installment debt, and other loan payments can eventually get out of control, until eventually,  the borrower may not be able to even settle the minimum amount due for each type of debt. In the end, the borrower will have no other choice but bankruptcy if funds are not obtainable with the help of friends or family or debt consolidation.
➤Unexpected Expenses
Other times, unexpected expenses such as loss of property due to theft or natural calamities like earthquakes, floods or tornadoes for which the owner is not insured can force some into bankruptcy. Most homeowners are now aware that there is a separate coverage for fortuitous events like earthquakes. As such, they can lose their homes, if not all of their possessions in the face of such calamity.
➤Foreclosure
When people face foreclosure on their homes, more than 1% of Americans to filing for bankruptcy. This enables them to re-organize their debt which may prevent them from having to foreclose in the future.
➤Utility payments
With the rising costs in real estate, the utility payments people have to pay are also increasing. Heat, electricity and other necessities are paving the way to bankruptcies.
➤Student loans
A lot of people have not been able to fully pay their student loans well beyond college. Studies show that student loans account for 1% of all filed bankruptcies. That 1% translates to approximately 15,000 bankruptcies a year.
➤More money being spent versus the income earned.
At the end of the day, people have to keep track of expenses.  When your income is running low, do not be surprised if you may be in the red sooner than you think. Bills come at a steady pace. They will not stop just because you do not have sufficient means to pay them off. There are many reasons why people are forced-or choose-to declare bankruptcy. But more often than not, common sense, sound financial planning, and preparation for the future can nip the problem in the bud.
Should you speak to a bankruptcy attorney in Seattle?
Worse comes to worst, you may need solid legal advice before you actually dive into bankruptcy. Do not hesitate to speak to an experienced bankruptcy lawyer in Seattle. One of the best bankruptcy attorneys is at Northwest Debt Relief Law Firm. Our bankruptcy attorneys will help you with the options available to you and guide you on the path to a fresh start. Call us now for a free initial case evaluation.

The post What are the Top Causes of Bankruptcy? appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.


1 month 2 weeks ago

Bankruptcy has proven to be an excellent method to get rid of unmanageable debt. Throughout the years, millions of people around the U.S. have witnessed the benefits bankruptcy can bring into their lives. However, there is still confusion and fear surrounding the word “bankruptcy.” How does bankruptcy work and how much time will a discharge […]
The post How Long Will Bankruptcy Stay on My Credit Report in California appeared first on The Bankruptcy Group, P.C..


1 month 2 weeks ago

Yellow taxi cabs and New York City — what could be more iconic?
Successfully hailing a cab has always been a rite of passage for New Yorkers. It has bewildered out-of-towners but was traditionally handled with little effort by seasoned residents of the Big Apple: spot an on-duty cab, raise a hand, hop inside, enjoy a potentially strange, yet authentic, experience.
The old-school taxi business has been under assault in New York for some time, however, as Uber and Lyft have spent half a decade rapidly expanding their operations. Ride-hailing has flooded Manhattan with cars and driven down the value of the city's allocated taxi medallions: There are 13,500 cabs in New York City — but there is something like 80,000 vehicles aligned with ride-hailing services, according to The Wall Street Journal
Taxis now have a new challenge, and it could be an existential one: congestion charges in New York, which are set to be the first in a US city.  
The congestion-pricing scheme is now part of a New York state budget, with the fees to kick in by 2021. People driving into the congestion zone — Manhattan island below 60th St. — will be hit with a $12 to $14 fee (it will likely be assessed using the E-Z Pass system, which already covers many bridges, tunnels, and toll roads in the region). Taxis will be billed $2.50 per ride, while ride-hailing services will be billed $2.75. 
Taxis don't cause congestion But Uber and Lyft, for example, will be able to carve out a discount for a "pooled" ride, knocking the fee down to $0.75. Taxis won't be able to do this — and it could be impossible to monitor whether ride-hailed pools actually wind up transporting multiple passengers. 
The whole thing is intended to generate $15 billion over five years for capital improvements to the city's mass-transit system (in one of those "only in New York" twists, the state government in Albany oversees mass transit in New York City). That's much-needed funding, and one hopes it will be wisely spent. But the most recent expansion of the city's subway, the Second Ave. line, took decades and cost a staggering $3.8 billion, so don't get your hopes up.
Congestion pricing, of course, should ease Manhattan gridlock, but it will do this at the expense of turning over the city's most lucrative sections to Uber and Lyft while continuing the destruction of the taxi business. It's a hard political bargain, which was forged by New York Gov. Andrew Cuomo.
As far as I can tell, the plan combines accepted economic theory about congestion caused by personal cars — it's an unpriced "externality" — with a cunning effort to get well-capitalized Silicon Valley companies to pay for upgrading mass transit. Taxi drivers caught in the middle Taxi drivers are caught in the viselike middle. They've persuasively argued that because their numbers have long been capped, they aren't part of the congestion problem. This is accurate — in fact, it's hard to see why taxis aren't exempt from the charge. They're sort of the longstanding third leg of a New York City transit stool, with buses and subways being the other two. 
The taxi business has evidently lost that argument and could now have a tough time competing with Uber, Lyft, and others because ride-hailing services — already losing massive amounts of money as they chase the growth that investors desire — will simply cut prices to avoid any passenger sticker shock.
The double standard at work here is actually so glaring that it's almost hard to believe it's real. Uber, Lyft, and other ride-hailing services simply deluged New York City streets with vehicles in an effort to rapidly build their businesses. And we know how big those businesses can be: Lyft's initial public offering last week valued the company at over $20 billion.
The taxi business is hardly pure — economists have often argued that it was a monopoly, and, at one point, taxi medallions were costing more than $1 million. But New York is now using its lawmaking and budgetary power to pick a clear winner in the transit game; the kind of money that the Ubers and Lyfts can bring to the table is simply too humongous to resist.
Pragmatists will tell you that the horse, so to speak, has left the barn anyway, so it makes sense for New York to effectively tax ride-hailing to make up for years of neglecting the transit systems that have nothing to do with gridlock. In that case, the taxi business, iconic or not, is expendable.
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