If you are a farmer and need to file for Chapter 12 bankruptcy to address federal tax debt, there are several options available to you. First, you can apply for an offer in compromise (OIC) with the IRS. This is a negotiation between the taxpayer and the IRS that allows the taxpayer to settle the debt for less than what they owe. The taxpayer must meet certain criteria in order to qualify for an OIC and provide documents and financial information to prove their ability to pay the proposed settlement amount.
You can also try to negotiate with the IRS on a payment plan, or installment agreement. This allows you to make payments towards your debt over time which reduces the burden of the debt. You must also meet certain criteria to qualify for an installment agreement, and you must provide evidence of your ability to pay the proposed payment plan.
In Chapter 12 bankruptcy, you can file for a lien strip or lien avoidance if your property does not have enough equity value to cover the federal tax debt. A lien strip allows you to wipe out the lien imposed by the federal tax debt, effectively eliminating the debt.
In Chapter 12 bankruptcy, you can also file for a discharge of your federal tax debts. This is a process that eliminates all or part of your tax liability and prevents future enforcement efforts from the IRS. In order to qualify for this, the debt must have been due for more than three years and you must prove that you filed taxes for all of those years on time. This can be a difficult process and is not always successful, so it's important to speak with an attorney who specializes in bankruptcy law if you are considering this option.
Finally, Chapter 12 bankruptcy also allows you to negotiate a repayment plan for your federal taxes. This means that, instead of eliminating your full tax debt, you can make monthly payments over a set period of time in order to pay off the debt gradually. Your attorney can help you determine if this is an option that would be beneficial for you and can negotiate a payment plan with the IRS.
Overall, if you are a farmer and need to file Chapter 12 bankruptcy, there are ways that you can get rid of your federal tax debt. You may be able to negotiate an Offer in Compromise or have the tax debt discharged entirely through bankruptcy. Alternatively, you could also opt for a repayment plan with the IRS. If you are in need of assistance with your bankruptcy contact your local agricultural attorney for legal services.
