Tip for Bankruptcy Clients who Owe Back Taxes

– by Victoria Ring

We had a bankruptcy client this week who filed a Chapter 7 but owed the IRS back taxes. The client had made arrangements to pay the back taxes through an IRS-approved payment plan.

When the bankruptcy was discharged the client received a CP504 Form from the IRS which is an Intent to Seize Property. If avoided, the IRS will seize the bank account, garnishee wages and implement any number of collection procedures.

Upon contacting the IRS office, we were informed that when a bankruptcy is filed, payment plans are voided and need to be reinstated. This requires a call to the IRS office, which the debtor can do.

Since most back taxes are included in a Chapter 13 Plan for the trustee to pay; it is important to inform all Chapter 7 clients who owe back taxes of this procedure.

Recommended Tax Attorney

Brian D. Salwowski
Attorney at Law
55 Monument Circle #1300
Indianapolis, IN 46204
Office: 317-423-0019

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