Filing for Bankruptcy with Our Team of Bankruptcy Attorneys Provides Relief
If you are self-employed, a sole proprietor, or an owner of a small business, it can be challenging to keep up with your finances. In some cases, we know small businesses owners are their own accountants, while also trying to be out in the field every day working hard.
With so many benefits to owning your own business, including independence and the ability to offer high-quality services the right way, the more difficult parts – like managing your finances and paying taxes – are certainly a downside.
If self-employed tax debt accumulates, it can feel suffocating. However, Wink & Wink’s team of bankruptcy attorneys can provide a solution, including tax debt resolution negotiations with the IRS or Colorado Department of Revenue to help you and your business toward growth and success. Whether we’re assisting business owners with Chapter 7 bankruptcy, Chapter 13 bankruptcy, or helping residents weigh the pros and cons of debt consolidation in Denver, our team helps our clients make the best decision for them – the choice that will ultimately benefit them the most. That’s our commitment at Wink & Wink.
The Challenges of Tax Debt and How Filing for Bankruptcy Can Help
As a sole proprietorship or small-business owner, it can be difficult to keep up on taxes. Here are some of the challenges that business owners face:
- You haven’t made estimated tax payments monthly or quarterly, so now you have a big tax bill at tax-time, and it’s too much to handle.
- You haven’t taken out income tax from your employees’ paychecks, and now that money is due to the IRS.
These challenges can be understandable – especially in today’s economic climate where jobs fall through, business slows, and all of your stressful day-to-day responsibilities are getting the best of you. A free consultation with a bankruptcy attorney can guide you through Chapter 7 bankruptcy, Chapter 13 bankruptcy, or debt consolidation in Denver, depending on which option will benefit you the most.
How Filing for Bankruptcy and Other Key Solutions Can Resolve Tax Debt Challenges
Two of the biggest tax debt challenges for contractors, sole proprietorships, and small business owners involve financial management decisions where you’ve struggled to put aside money for taxes or haven’t paid your employees’ payroll taxes to the IRS.
In the case of taxes you owe as a self-employed contractor or sole proprietorship, you can file for bankruptcy to get tax debt relief if you meet five requirements:
- These taxes are income taxes, not payroll taxes, as these can’t be discharged in bankruptcy (more on this below).
- You did not commit fraud by filing a deceptive tax return or by attempting to avoid paying taxes. Additionally, you can’t be convicted of tax evasion.
- Your debt is from taxes that are at least three years old.
- You filed the tax return for the debt that you hope will be discharged in bankruptcy, and it has been two years since you filed that return.
- The IRS has not reassessed your tax debt in the past two years prior to filing for bankruptcy.
If you file for Chapter 7 or Chapter 13 bankruptcy, tax debts that meet these requirements would be considered non-priority debts that can be discharged. If you’re unsure about where you stand with your tax debt, Wink & Wink’s team of bankruptcy attorneys can help by sitting down with you to hear your story, carefully examining paperwork and details of your case, and coming up with the best solution for you and your professional life.
Tax Debt from Payroll Taxes: Can You File for Bankruptcy?
In a case where you have set aside but haven’t paid payroll taxes withheld from your employees’ salaries, you are committing what is called a trust fund violation. Your employees assume that the employment taxes you reserve from their checks each pay period will be given to the proper taxation authorities – that assumption or “trust” is where this violation gets its name. It is important to know that you are not shielded from liability even if you operate an LLC, because payroll taxes can be assessed directly to the owner of the business.
In Colorado, the taxing authorities are very aggressive about repayment on these taxes, as well as sales taxes. Sales tax is similar to the employee’s portion of payroll taxes because the customer buying your goods is paying the tax, which you are holding for the state. The IRS’s repayment tactics are also quite rigorous. They can:
- Put a lien on your home, and when you go to refinance or sell, those taxes must get paid, possibly in full.
- Levy your bank account.
- Garnish your wages.
Imagine having both the state and federal taxing authorities imposing penalties on you until you repay. No one wants to be in that situation.
Therefore, it is of the utmost importance that you develop a plan to resolve your tax debt, even if you are struggling financially. This is where Wink & Wink can help by offering strategic support to negotiate with the tax authorities. For instance, we often begin by reminding our clients of the following facts about paying back tax debt from payroll taxes:
- If you’ve committed trust violations, this debt cannot be discharged in bankruptcy.
- Even if your taxes are not dischargeable in bankruptcy, you can negotiate with the taxing authorities by presenting an offer in compromise to settle your tax debt.
Gaining this expert legal knowledge from a premier Chapter 7 bankruptcy and Chapter 13 bankruptcy firm often goes a long way in restoring our clients’ hope. They recognize almost immediately that they’re working with a team who understands the legal system, particularly as it relates to tax debt.
Filing for Bankruptcy and Other Forms of Tax Debt Relief Are Attainable with Wink & Wink
When you work with our team of bankruptcy attorneys for Chapter 7 bankruptcy or Chapter 7 bankruptcy – or if you’re curious about debt consolidation options in Denver – we provide dynamic perspectives and key legal strategies to help you take care of your financial challenges.
As you continue your business, here are some resources on payroll tax withholding in Colorado and more, which may be useful as you make healthy business decisions to avoid tax debt in the future:
- Withholding Tax Guide from Colorado’s Department of Revenue
- The IRS’s Comprehensive Resources for Self-Employed Individuals
- The Denver Public Library’s Tax Filing Assistance and Resources
- ADP’s Colorado Paycheck Calculator
Whether you’re struggling with tax debt as a self-employed contractor, sole proprietor, or a small business owner, we will always point you in the right direction and provide the momentum you need to continue moving forward.