The following is an excerpt from:
"For Whom the Tax Tolls: Significant Events That Extend IRS Collection Rights"
Published in Tax Practice & Procedure - October/November 2004
By Michael S. Fried and Zachary S. Fried
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Conclusion
Relying on our conclusions, we recommended the following strategy to Dr. Delinquent:
- File a Chapter 7 bankruptcy on October 16, 2004, seeking to discharge all of the client's nontrust fund tax liabilities.
- After receiving the Chapter 7 discharge, file a Chapter 13 case seeking to pay the remaining $100,000 trust fund tax liability in a five-year Chapter 13 Plan.
The client accepted our recommendations, and we are currently preparing a Chapter 7 bankruptcy to be filed on the appropriate date. It is our expectation that implementation of our strategy will reduce our client's tax liabilities by approximately 95 percent, and provide for payment of the remaining $100,000 trust fund tax liability during his Chapter 13 case.
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- Introduction
- Statute of Limitation on Collection
- Discharge of Taxes in Bankruptcy
- Hypothetical Client
- Collection Statute Expiration
- Bankruptcy Solutions and Tolling Issues
- 1998, 1999 and 2000 Tax Liabilities
- 1997 Tax Liability
- Two Hundred and Forty Day Assessment Period
- Application of Three-Year Look Back Rule and Two-Year Filing Rule to 1997 Tax
- LTR 200404049
- Application to 1997 Tax Liability
- 1987 to 1996 Tax Liabilities
- Conclusion
- Endnotes & Sources