Go to Top

Tax Debt and Bankruptcy

When you are hit by high taxes that you can’t pay, it is easy to be tempted to try and find a tax relief service that claims to be able to lower that debt drastically. The problem, unfortunately, is that many of these programs are simply scams. While most people would not usually fall for these types of scams, so-called tax relief companies prey on desperate people who are looking for any form of relief.

With debt relief, if it seems too good to be true, it probably is

There is no simple way to deal with tax debt, unfortunately. Often it takes time to work out a payment plan or even to declare bankruptcy. That’s why you should be very skeptical of anyone who claims they can write down the amount you owe to “pennies on the dollar” or any company who claims that you will have “instant results.” They almost inevitably are lying.

Even if a company is advertising on the radio or TV, you are not guaranteed results, nor are you assured that they are trustworthy. In fact, in most cases, these companies won’t do a thing to help customers find actual relief. A majority of tax relief companies require you to pay a fee upfront for their services and have you sign a very carefully worded document that absolves them of any responsibility to actual deliver any results. One large “tax relief” company even managed to collect tens of millions of dollars over the last few years without negotiating a single settlement with the IRS. Although there are genuine ways to work out debt agreements with the IRS, few of these companies actually even file the instruments they advertise, much less follow up with the needed dedication.

Some of these tax relief scams are even worse. According to the IRS, some people have actually been drained of their entire lives’ savings by companies that claimed they could settle debts “for a fraction of the amount owed.” The Federal Trade Commission receives hundreds of complaints every year from consumers who, after signing up with some of these companies and paying thousands of dollars in upfront fees, lost even more of money because the company made unauthorized charges to their credit cards or withdrawals from their bank accounts.

Get real tax relief

There are ways to get tax relief, but they almost never come from companies that make the most noise. You can always contact the Taxpayer Advocate Service, an arm of the IRS that assists taxpayers who are experiencing economic difficulties or looking to resolve tax issues. They are very busy, and cannot often customize their advice fully to your situation, but they will point you towards the next steps you can take. The IRS also provides a list of low-income taxpayer clinics on its website.

Another way to be assured that your case is given special attention is to work one-on-one with a bankruptcy lawyer. It is almost always best to work directly with a trusted specialist who can work directly with the IRS to find a payment plan that works for you, because you can be assured that your case is given priority. You just need to be sure you choose a trustworthy firm with a good reputation. They should never ask you for a fee before laying out your options.

A bankruptcy attorney that knows and understand the laws well can often use the bankruptcy process to drastically lower the amount of taxes you have to pay and can set you up on a payment plan that you can afford.

If you are struggling with tax-related debts, trust the Luftman, Heck & Associates team of bankruptcy attorneys to help you work through the process and free yourself from your tax burdens. Contact us today to get a consultation and learn about your options without risking your financial security even further.