The Bankruptcy Petition

We, as tax professionals, do not file the paperwork for our clients. (In Louisiana that is called practicing law without a license.) But we can help them gather and organize the information they will need. If any of you have been involved in OIC applications you will see the similarities in the process here.

It is important that you understand the basics of the bankruptcy petition and various attachments in order to assist your client in gathering the necessary documents to file with the court or provide his attorney.

See the Appendix for a sample of the bankruptcy paperwork your client may have to file. As I mentioned earlier, if you have ever filled out some of the IRS Form 433 series or an Insolvency worksheet you will quickly realize that, with the exception of the actual petition, this is quite similar.

You are basically assisting your client in gathering all of his debts, his assets, his income, and his current living expenses. By putting that all together on paper in one place, probably for the first time, the client will have a much better understanding of exactly where he stands and what course of action to take next.

This is the point where your client will need to determine which Chapter will be best for him or if bankruptcy is even the solution to his situation.

Other Solutions For the Taxpayer

Earlier we talked about some other IRS payment options and the benefits of bankruptcy over those options. Now we are going to look at those options from the other side.

In most states a bankruptcy filing stays on your records and credit reports for at least ten years. For someone trying to make a fresh start, that can be an awfully long time. There is also the social stigma that still attaches itself to the filing of a bankruptcy. In most states bankruptcy records are public records and can be read by anyone who knows where to look, unless they are sealed.

There are good options for our clients without filing bankruptcy, if that is not the way the client chooses to go. Clients may need out assistance with:

1. An Installment agreement, either full pay or partial pay

2. An Offer In Compromise

3. Abatement of Penalties

4. An appeal (CAP or CDP) or Audit Reconsideration

Of course, the first thing your client has to do before any of these solutions or a bankruptcy can be considered is to get compliant with his filing requirements for both the IRS and the state. We can help him do that.

In accordance with Circular 230 Disclosure

Cut and Paste Links to State Bankruptcy rules:

http://www.nolo.com/legal-encyclopedia/bankruptcy-exemptions-state

http://www.bankruptcy.com/state-specific-bankruptcy-laws/
Cut and Paste Links to great bankruptcy article and websites:

http://morganking.com/TaxJustice/taxjusticeindex.html

http://www.bankruptcybooks.com/

http://www.morganking.com/pastissues.html

Home

http://www.taxmam.com/Media_Links/