Delinquent Taxes
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PERSONAL INCOME TAXES |
| A personal bankruptcy may be an effective way to address significant personal tax issues. For individuals (or married couples) who owe federal and/or state income taxes, a
Chapter 7, Chapter 11, or Chapter 13 Bankruptcy may provide an alternative to going through difficult and costly programs directly with the taxing authority. A common misconception is that all taxes of any kind are not dischargeable in a bankruptcy case. Some taxes actually are dischargeable in bankruptcy, including personal income taxes that are more than three years old. Fiduciary taxes are generally not dischargeable. The Bankruptcy Code’s provisions relating to taxes are very complex and differ by chapter or type of bankruptcy that you file. It is often the case that the bankruptcy case allows for debtors to "catch up" on their tax obligations. Because the Bankruptcy Code requires that debtors in Chapter 13 cases be "current" in the filing of their tax returns, the bankruptcy case offers an opportunity to review complete tax records and determine what remains due and if any portion of past due taxes, interest, and/or penalties, may be discharged. Even if amounts are due (including those that result from a federal tax lien), a reorganizational bankruptcy under Chapter 11 or 13 provides a framework to propose a repayment plan to the IRS, while having the opportunity to determine which taxes must be repaid. Some people also believe that filing a bankruptcy may affect their tax filings in the future. Generally, most individuals (or married couples) continue to file their personal tax returns in a normal manner and to ensure that where taxes were owed in the past, the taxing authority properly applies any refund. Due to the complexity of the interplay between state and federal tax laws and the Bankruptcy Code, anyone who is interested in learning their legal rights relating to personal income taxes and bankruptcy should consult with an experienced attorney who can review how these laws specifically apply to their situation. |
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PROPERTY TAX LIENS |
| If you own real estate in New Jersey and have fallen behind on your property taxes, New Jersey State Law entitles the municipality to conduct a "Tax Sale". If the outstanding
amounts are not satisfied or the sale not canceled for other reasons, the municipality will sell by auction a Tax Sale Certificate to the successful bidder. If no other action is
taken to redeem or otherwise address the outstanding amounts, the Tax Sale Certificate holder may be able to pursue a foreclosure action against the property two (2) years
after the initial sale. In New Jersey, there are many inherent risks when a homeowner owns property subject to a property tax lien because of the ability for the amounts due
to increase rapidly (interest may accrue at a rate of up to 18%) and the strict foreclosure laws relating to a property tax lien. The failure of a homeowner to maintain current
with property tax payments is also often a basis for a mortgage company to foreclose, depending on the specific terms of a mortgage and note. A personal bankruptcy may allow the homeowner to propose a plan of reorganization to repay property tax liens. A Chapter 11 or 13 bankruptcy may propose to repay amounts, propose a plan to allow the homeowner to resume their own property tax payments (to avoid the continuing increase in amounts due). In most personal bankruptcy cases, when the Bankruptcy Petition is filed with the Court, the automatic stay goes into effect and stops the continuation of foreclosure proceedings. This allows property owners the ability to propose a Plan to repay the taxes and preserve the Property. Due to the harsh nature of property tax liens and the laws relating to property tax foreclosure, you should immediately consult with an experienced attorney whenever you receive such a notice to allow for a review of your rights and obligations and determine how bankruptcy and other laws may protect you. For Additional Information Contact : The Property Tax Office in Your Municipality |
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