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Written by AskTheLawyers.com™
Different regulations dictate when the government can tax citizens for personal income, real estate, business profits, gifts, estates and a variety of other sources.
Income tax is a common source contention between the government and individuals and/or business owners. When a person owes back taxes, the worst thing he or she can do is ignore the notices from the IRS. The sooner you can review the situation with a tax lawyer, the better. Tax attorneys can negotiate with the IRS on the behalf of a person or business, and litigate the issue in tax court when necessary.
When an individual ignores IRS collection notices, penalties and interest will start to build. Further, if the IRS places a lien on a piece of property or a business asset, you will likely lose the ability to file bankruptcy and discharge the tax lien.
Bankruptcy can be an extremely useful tool for individuals with income tax debt. Certain income tax debt is dischargeable if it meets the eligibility requirements.
Once an IRS debt becomes a tax lien on a piece of property, it changes from being an unsecured loan to a secured loan. This has the effect of making the lien non-dischargeable in bankruptcy. However, you may be able to stop foreclosure from the tax lien by filing Chapter 7 or Chapter 13. Most bankruptcy attorneys offer free consultations to review your debt situation and offer you options.
The federal government exempts a certain amount of a person’s estate from taxation. In 2015, this amount was over $5 million. Therefore, estate taxes (sometimes referred to as “death taxes” as an anti-estate tax political euphemism), only affect multi-million dollar estates. Some states have their own estate taxes, with exemptions that are typically lower than the federal exemption. A few states also have separate inheritance taxes, which affects those who receive portions of an estate.
An attorney who plans estates attempts to lower the total taxable value of an estate so that little or none of the estate is taxable. Lawyers who plan estates for clients can utilize several techniques in order to lessen or altogether eliminate the effect of taxes on a person’s estate. Depending on a client’s specific situation, an estate planning lawyer may advise actions such as the following:
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