Success Story – Strategic Timing Saves Client $330K in Federal Tax Debt

Background: Our client was haunted by non-dischargeable federal tax liabilities of over $400K from a business venture. The client had experienced health issues, creating a lot of non-tax liabilities that created great stress on him and his family. He insisted upon filing for Chapter 7 bankruptcy relief to resolve the non-tax debt. 

Challenges: For many years, we had helped the client hold off IRS collections, and a bankruptcy filing would undo that work and likely have the IRS view his case with new eyes. We researched the collection statute and discovered $330K would be written off in four months if no bankruptcy were filed before that write-off date. Otherwise, the collection statute would be extended at least 9 months if the bankruptcy were filed immediately. We had to explain to the client the benefit of waiting and that our office could address his non-tax creditors in the interim. 

Result: The $330K was written off by the IRS before we filed the Chapter 7 for the client, and he suffered no adverse results from the four-month delay.