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Should you get a home equity loan to pay off back taxes?

IRS tax lien, bankruptcy and taxes, home equity loan back taxes

In this article, we’ll explain why getting a home equity to pay back taxes can be a great alternative to an IRS streamlined payment plan.

Will you be able to get a loan?

If there is a federal tax lien on your home, you may have trouble getting a loan.

Read moreShould you get a home equity loan to pay off back taxes?

Bankruptcy & Taxes: Discharging Tax Debt Under Chapter 7

IRS tax lien, bankruptcy and taxes, home equity loan back taxes

Discharging Tax Debt Under Chapter 7

A common misconception is that federal taxes cannot be discharged through bankruptcy. A Chapter 7 filing can be a very powerful tool in obtaining relief for past due taxes.

What is Chapter 7 Bankruptcy?

A petition filed under Chapter 7 of the Bankruptcy Code is used to discharge debt through liquidation of assets. However, exempt and excluded assets are retained by the debtor. Examples of exempt assets include your homestead up to 1 acre, personal property ($30-60K), life insurance, pensions for state and local employees, tools of trade, earned but unpaid wages, and unpaid commissions up to 75%.

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How to get Currently Not Collectible Status from the IRS

IRS currently not collectible

Taxpayers who have no ability to make monthly payments towards their tax debt can request that the IRS place their account in currently not collectible (CNC) status.

While a taxpayer’s account is placed as currently not collectible, the IRS will not levy or attempt to collect the debt. Taxpayers who are are temporarily out of work are good candidates for currently not collectible.

Read moreHow to get Currently Not Collectible Status from the IRS

Letter 6152 Passport Notice For Seriously Delinquent Tax Debt

IRS Penalties, innocent spouse relief, seriously delinquent tax debt

In a recent tax forum, the IRS stated that they are drafting a new Letter 6152 that will be sent to taxpayers who haven’t settled their tax debt. The letter will warn such taxpayers that their passport will be revoked.

The authority to revoke passports for “seriously delinquent tax debt” is provided under Internal Revenue Code § 7345.

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How to Stop an IRS Levy and Garnishment

IRS liens, IRS levy

This article discusses what an IRS levy is and how to stop an IRS levy.

IRS levy vs. lien

A federal tax lien encumbers a taxpayer’s property. It is filed with the county clerk and is intended to provide notice to 3rd parties (such as creditors) that the IRS has a secured interest.

Read moreHow to Stop an IRS Levy and Garnishment

Tax Court Upholds IRS’ Collections Action of Tennessee Man’s Debt

The U.S. Tax Court in Oliveri v. Comm’r, T.C. Memo 2019-57, found that the IRS didn’t abuse its discretion by pursuing collection of a Tennessee man’s tax debt after he failed to pay subsequent tax bills timely.

Issue

Whether or to What Extent Petitioner May Deduct Expenses He Incurred in 2012 Which He Contends Were Related to Evangelization.

Read moreTax Court Upholds IRS’ Collections Action of Tennessee Man’s Debt

Tax Court Says Spouse Was Not So Innocent

tax relief help, tax debt relief, tax relief, student loan consolidation

In Constance H. Briley v. Commissioner of Internal Revenue, docket number 7782-17 (T.C. Memo. 2019-55), the Tax Court denied innocent spouse relief to a Virginia woman, who the court said had reason to know of an error on her joint tax returns.

Findings of Fact

Constance H. Briley married Mr. Briley in 1988. They were married during the years involved; and although they separated in 2013, they remained married as of the date of trial.

Read moreTax Court Says Spouse Was Not So Innocent

Innocent spouse relief: Are you responsible for your spouse’s tax mistakes?

IRS Penalties, innocent spouse relief, seriously delinquent tax debt

When married taxpayers sign a joint return, they are jointly and severally liable for the taxes owed on the return.

Oftentimes a spouse will fail to report income or claim improper deductions or credits, without the other spouse knowing. In such cases, it might be grossly unfair to hold the innocent spouse liable for the other spouses’s mistakes.

Read moreInnocent spouse relief: Are you responsible for your spouse’s tax mistakes?