Owing back taxes to the IRS or State of Michigan can feel overwhelming, but Tax Debt Forgiveness Lawyers are here to help you find relief. Penalties and interest add up quickly, and you may worry about wage garnishments, bank levies, or tax liens threatening your income, home, and financial future.
The good news is that there are legal strategies to manage, reduce, or even eliminate certain tax debts while protecting your assets and peace of mind.
At Kostopoulos Bankruptcy Law, our experienced Warren tax debt forgiveness attorneys help clients address tax problems, stop aggressive collection actions, and find real, lasting solutions for unmanageable tax debt. We guide you through your options with clarity and compassion, empowering you to take control and move forward confidently.
Yes, under certain conditions, bankruptcy may discharge older income tax debts if:
The tax debt is income-based (federal or state)
The tax return was due at least three years before filing
You filed the return at least two years before filing
The IRS assessment is at least 240 days old
There was no fraud or tax evasion
Chapter 7 Bankruptcy: May eliminate qualifying older tax debts while protecting exempt assets, providing a fresh financial start.
Chapter 13 Bankruptcy: Allows you to manage tax debts through a structured 3–5 year repayment plan, stopping wage garnishments and levies during the process.
Our board-certified bankruptcy attorneys will evaluate whether bankruptcy can help resolve your tax debt while protecting your home, vehicle, and wages.
We have helped countless clients in Warren and throughout the Detroit metro area resolve unmanageable tax debts while preserving their financial stability.
Board-certified consumer bankruptcy attorneys with decades of experience
Proven success helping Michigan residents resolve tax debts while protecting their assets
Clear, personalized guidance tailored to your financial situation and goals
Comprehensive debt relief services, including tax debt, credit card debt, and medical debt resolution
Compassionate, responsive service focused on your peace of mind and long-term financial health
Tax debt can arise from missed tax filings, underreported income, or unpaid balances, and can quickly grow due to penalties and interest. Whether you’re facing unpaid income taxes, tax liens, or IRS collection notices, ignoring tax debt can lead to:
Wage garnishments and bank levies
Tax liens on your home, impacting your credit and blocking refinancing or sale
Seizure of assets in severe cases
Ongoing penalties and interest, increasing your total debt
Stress and uncertainty that disrupt your ability to plan for the future
The IRS and state tax departments have broad authority to collect unpaid taxes, often without the need for a court order. Taking proactive steps now can help you protect your income and assets while working toward financial stability.
Many people believe tax debt is impossible to resolve, but there are programs and legal strategies that may help, including:
Offer in Compromise (OIC): Allows you to settle your tax debt for less than the full amount if you can prove financial hardship. While qualifying for an OIC can be challenging, it may provide substantial relief if accepted.
Installment Agreements: Establishes an affordable payment plan, allowing you to pay off your tax debt over time while avoiding further collection actions.
Currently Not Collectible Status: Temporarily pauses IRS collection efforts if you cannot pay due to financial hardship, giving you time to stabilize your finances.
Penalty Abatement: Requests the removal of certain penalties, reducing your total debt and making repayment more manageable.
Bankruptcy Discharge: In specific situations, older federal or state income tax debts may be dischargeable through Chapter 7 or manageable under a Chapter 13 repayment plan.
Our team will review your tax debt and financial situation to determine which strategy offers the best path to relief, ensuring you understand your options and can make informed decisions.
Eligibility for tax debt forgiveness depends on your income, expenses, assets, and the amount you owe. If you can demonstrate financial hardship and inability to pay your full tax debt, you may qualify for partial or full forgiveness through an Offer in Compromise or other IRS relief programs.
Penalty charges can range from 25% to 500% of the tax due, depending on the type of the tax! If you do not pay your taxes, you may receive a LETTER OF INQUIRY, NOTICE OF INTENT TO ASSESS, and/or a BILL FOR TAXES DUE (Final Assessment).
Tax Exceptions and Exemptions for Canceled Debts include: debt canceled as a gift, bequest, or inheritance; student loan debt forgiven under specific programs; debts normally deductible if paid by a cash basis taxpayer; and purchase price reductions given by a property seller.
The Collection Statute Expiration Date (CSED) for Michigan taxes is 6 years. After this period, the state stops collection actions like wage garnishments or levies, but the tax debt remains legally owed and does not disappear.
