Equitable Tax Relief

Equitable Tax Relief

A favorite story over the years about life-saving assistance to one of our bankruptcy clients is the topic for today.

Mary (not her real name), who was about 45 years old, inherited a substantial sum of money from her mother, who had died prematurely.  Prior to her death, Mary had been married to Bill (not his real name), who was wealthy but, unfortunately, failed to pay federal income taxes to the IRS.  Even though Bill had earned all the money, Mary was also liable to the IRS because, as a married couple, they had filed joint income tax returns.

Mary hired us because the IRS had levied against her bank account consisting almost entirely of her inheritance from her mother.  Without our intervention, she would lose everything her mother had left her.

We took two legal steps.  First, we filed an individual chapter 11 bankruptcy for Mary to stay (or temporarily halt) the IRS tax levy.  Second, we filed a request on behalf of Mary for equitable relief from her joint liability for the outstanding federal income taxes owed the IRS.

We based our request for equitable relief on the following factors:

  1. Bill had earned all the money that generated the tax liability.
  2. Bill used the money for his exclusive benefit, and did not share any of it with Mary.
  3. Bill had physically and emotionally abused Mary over a period of many years.
  4. Mary had sought psychological treatment because of this abuse.

Fortunately, the IRS agreed with our assessment, and relieved Mary from any liability for the delinquent federal income taxes.  And the Bankruptcy Court discharged her from liability for credit card debt that she had incurred while her bank account was on hold because of the IRS levy.

If you face a financial challenge that appears to be overwhelming, contact us for bankruptcy and/or tax relief.  We can help!

Posted in Attorney Blog, Bankruptcy, Taxation