Bankruptcy tends to get a bit of a bad rap. You probably picture financial ruin and losing everything. But that’s not always what it means, especially when you’re facing a mountain of tax debt.

While you might think your only choice is a rigid payment plan or a long-shot Offer in Compromise, there’s another powerful, court-backed tool that could be an option for your situation: Chapter 13 bankruptcy (aka: the wage earner’s plan).

With a Chapter 13 filing, you can reorganize your finances and get a fresh start, often while preventing foreclosure of your DuPage home or the liquidation of your assets. And yes, it can be a game-changer for your tax debt as well, and that’s what I want to focus on today.

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This podcast from Thinking Outside the Box Law, Inc. announces a significant development from the IRS, ILM 202511015, which provides new avenues for tax relief for victims of online scams. The guidance clarifies that losses from scams with a profit motive, like investment or phishing schemes, may now be tax-deductible under IRC § 165(c)(2). It specifies that the deduction should be claimed in the year the theft is discovered and recovery is deemed unlikely, based only on the actual amount invested. However, the document emphasizes that scams without a profit motive, such as romance scams, are not currently deductible, and these new rules differ from existing Ponzi scheme tax relief.

https://thinkingoutsidetheboxlaw.com

email@otblaw.com

630-225-9840

This legal podcast, authored by Jon Dowat, an attorney at Thinking Outside The Box Law, Inc., focuses on the serious repercussions of not filing tax returns, whether or not a person owes taxes. The text explains that even if no taxes are owed, individuals can forfeit refunds, lose opportunities to carry over business losses, miss out on refundable tax credits, and risk the IRS filing a less favorable substitute return on their behalf. Furthermore, unfiled returns can impede eligibility for bankruptcy and make securing loans difficult. For those who owe taxes, the consequences escalate to hefty penalties, potential incarceration, public tax liens impacting credit, wage garnishments, and bank levies. Despite these warnings, the firm emphasizes that it's not too late to rectify unfiled returns and offers professional, non-judgmental assistance to simplify the process.

https://thinkingoutsidetheboxlaw.com

email@otblaw.com

630-225-9840