Tax debts can be discharged! – sometimes

A common misconception floating about is that income tax debts can never be discharged. This myth arises from the reality that income tax debts have a favored position in the bankruptcy code. Also, trying to figure out which tax debts are dischargeable can be mind boggling even for attorneys. Frankly the entire bankruptcy code can be mind boggling since most provisions relate back to other provisions that one must read before the original provisional can be understood. Plain english is a foreign concept to drafters of legislation. All that aside, to determine if your income tax debt is dischargeable, start at 11 U.S.C. Section 523(1). Section 523(1) immediately directs you to to two other provisions, the pertinent one here being 11 U.S.C. Section 507(a)(8). Section 507(a)(8) then circles you back into Section 523 making for a dizzying ride. You are welcome to go to these statutes and read them for yourself. If you understand them, you are either a bankruptcy attorney or you missed your calling.

Let me break it down for you with a plain english translation. In order for an income tax debt to be dischargeable, all these requirements must be satisfied:
1) The tax return filing must have been due more than three years before you file your bankruptcy petition. If an extension was filed, then that moved the due date for your filing out so extension periods do not count towards that three years.
2) Were either officially assessed more than 240 days prior to the bankruptcy petition or were not yet assessed but were assessable. I know, that last part does not seem to be in the statute but that is because of how this statute is worded. It is listing what tax debts are excluded from discharge as those assessed within 240 days of filing, so those not assessed and assessed (but assessable) outside of the 240 days are not excluded. Offers in compromise and stays in other proceedings toll this time period plus add on 30 or 90 days respectively.
3) A tax return had to have been filed.
4) If it was filed after the final due date, including extensions (filed late), it had to have been filed at least two years before the bankruptcy petition is filed.
5) There can be no fraud or attempts at evasion of the tax at any time.

In order to know calculate these items precisely, one must obtain a tax transcript from the IRS. This can be obtained by filing a Form 4506T from your friendly Internal Revenue Service agency.

A Party for the Lexington & the Bluegrass

I’ll be there!

Adoption statutes require strict compliance

Adoption can be an expensive proposition and I have been asked on occasion if a person can do their adoption pro se (on their own and without a lawyer). Actually, this question tends to come up in family law matters in general far more than in other areas of law. I hear this question about self-representation even less often in bankruptcy where folks clearly are in dire straits financially. My response is typically yes, you can but . . .. Then I relate to them a show I saw on Discovery or TLC about a man who was out hiking and became trapped when a boulder rolled onto his arm. He would have died out in this ravine had he not amputated his own arm with a pocket knife (the tv show assured me this was a true story). Anyway, in this graphic and slightly grotesque story the man did what he had to do to survive, but it had to be exceedingly painful and extremely messy. Representing oneself in a family law matter can be just like that: exceedingly painful and extremely messy.

That answer seems to ring intuitively true for people in divorce situations, but many assume that since an adoption is a happy occasion and that judges love putting families together rather than tearing them apart, that one could handle it without a lawyer. The contrary is actually true. In the recent Kentucky Court of Appeals decision R.M. v. R.B., 2008-CA-001099-ME, (2009, to be published), the Court reminds us that “[b]ecause adoption is a statutory right, Kentucky Courts require strict compliance with the statutory procedures to protect the rights of natural parents.” The statutory framework for adoption contained in KRS 199 has many “if, then” kinds of provisions requiring careful navigation even by seasoned adoption attorneys. Because of this strict compliance requirment, adoption is the least likely area of family law where one should proceed pro se. At the very least, consult with an attorney that is knowledgeable in adoptions to see if there are any “boulders” in your particulare situation that need to be dealt with.

Amazing Grace

Go see the movie Amazing Grace. Not much in the way of action, but it kept my attention and was very inspiring.

Some basic child support information

I recieve more questions about child support than almost any other topic so I thought I would condense the information down regarding a few recurring themes. First, the very best legal advise I have regarding child support is this: pay it. And if there is some situation truly beyond your control that prevents full payment, pay some of it and let the child support office or court know what is going on. You can, and many people do, go to jail over non-payment of child support.

Second, do not equate child support and visitation. If you are denied access to your child for visits, you still MUST pay child support. Conversely, if you are owed child support, do NOT withhold contact between the other parent and your child as a means to get even or force payment. The damage done to the child cannot be outweighed by the unpaid support. Child support and visitation are two separate issues that courts are usually very careful to consider indepenently. The statute for restricting visitation allows for time sharing to only be curtailed if the visits seriously endanger the wellbeing of the child; it does not allow for restricting visits over non-payment.

Third, once a child support payment has accrued (become due), nothing will erase it. Even if your parental rights are terminated, voluntarily or involuntarily, the already accrued child support will continue to have to be paid. The termination only stops new payments from coming due.

Fourth, and this is an important thing to know about child support – PAY IT! (I know, this was actually #1, but it bears repeating). Do not waste time fuming about how you think the other parent is using it to go out and party. You helped bring this child into the world and child support is a basic responsibility. You cannot control exactly what that money is spent on, but you can be sure that without the child support, your child would be going through life with less of the things they need to thrive.

Grandparents As Parents

This is a fantastic resource for the numerous grandparents who are raising their second generation – their grandchildren. There is a Grandparents Raising Grandchildren conference taking place tomorrow, 3/20, at Centenary United Methodist Church. The Grandparents As Parents organization offers support and information to grandparents facing the unexpected challenges of being parents all over again.

Holiday

Happy Thanksgiving from Troutman & Hays!

Hello world!

Troutman & Hays has published a quarterly newsletter for their clients and friends for some time.  They offered educational information on various areas of law and also a bit of trivia on the origina and meaning of words and phrases.  The firm is growing and offering a more comprehensive array of services.  To keep up with this growth, this blog is dedicated to providing even more commentary and information on developing areas of Kentucky law.