Christian Debt Recovery

Maryland State Tax Debt Relief

August 6th, 2009 |

Author: Gavin

If You Haven’t Filed Taxes In A While, You Need to Read This

You can bet there are people right now who are struggling with the question: “I haven’t filed in [fill in the blank]____ years. Should I file this year?” As a tax and bankruptcy lawyer serving individuals and businesses in Maryland, Virginia and DC, this law firm is very familiar with this taxpayer’s quandary.

On the whole, it’s better to file — even if you can’t pay — for a number of reasons:

- IRS, and your state tax agency, distinguish civil tax violations. There are a separate set of penalties added to your tax bill for “failure to file” and “failure to pay.” Go ahead and file, at least. You can save money in penalties that will be racked up.

- Or get more time with an installment agreement. For tax debts of $25,000 or less in combined tax, penalties, and interest, you are virtually guaranteed an installment plan and at a monthly payment you propose and can afford. Note that you will still be accruing interest and penalties so that the tax debt grows at about a 25% rate. You will need to make a large payment to actually pay down the tax bill. Don’t end up like a lot of the taxpayers who come into our office and lament: “We’ve been paying IRS for several years now, and it’s not going down!” Otherwise, at most, you are buying time.

- Can’t pay? Then ask to placed on “uncollectible status.”.” However, if successful, that only forestalls the day of reckoning. Eventually, it’s hoped, you will be earning more, and when that happens the taxman will see it from W-2s sent to the agency, and he will come a-knocking for what’s owed.

- Wait three years and you may be able to get rid of the tax in bankruptcy. One of the key requirements to discharge a tax debt is that you must have filed a tax return for that tax year more than TWO years before the bankruptcy filing. The two-year rule for tax returns causes a serious problem for serial non-filers. Often we get visits from taxpayers who haven’t filed for a while and now want to “come clean.”. We can help them to freeze the last three years of taxes from growing and pay them off in a Chapter 13 bankruptcy, but there is no discharge, unfortunately, for the other years. It can be solved, but it may not be easy, and it may not be cheap.

It’s a saying you’ve surely heard before, but it is true: Nothing’s as certain as death and taxes. If you have a social security number, IRS knows where you work, have bank accounts or maintain investments. Eventually, IRS will prepare a return for you, but with minimal, if any, deductions such that your tax bill will be much larger than if you prepared it yourself. Also, before IRS or the bankruptcy court considers tax relief in your case, you will have to get all the missing tax returns prepared and filed. So, why wait? Just get it done.

About the Author

Edward Gonzalez
focuses on
bankruptcy and tax law
for individuals and small business in MD, VA and DC. He worked for the IRS and holds a JD and master of law in taxation from Georgetown University. He has 20 years experience. For more information, call the Law Office of Edward Gonzalez, P.C. at (202) 822-4970 and visit his website at http://www.money-law.com/