Discharge of back income taxes gives stockbroker back his life

| Dec 14, 2020 | Bankruptcy, Chapter 7, income tax

A self-employed stock broker was referred to me by another stockbroker whom I had represented. He received “1099 income” as an independent contractor, rather than a salary subject to withholding taxes. Each year he fell deeper into the rut caused by lack of discipline to set aside money each week and pay “Quarterly Estimated Taxes.” He always assumed “the big fee” would come before he needed to file his tax returns.

My review of his tax records revealed that, although he did not make payments, at least he filed his tax returns. More than 3 years had passed since most of the due dates. More than two years had passed since he had filed most of the the returns. These time periods had not been extended by an “offer in compromise” or a prior bankruptcy filing. Furthermore, since he did not own any real estate, the government was not protected by a tax lien. His current income was below the “median” for New York.

Accordingly, I was able to qualify him to file a chapter 7 bankruptcy case and discharge $450,000 in federal and state income taxes. He remains liable for the most recent years, and was able to work out arrangements to pay those taxes on an installment basis. A burden was lifted from his shoulders and he now feels in control of his life again.

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