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We failed to appeal 'offer in compromise' in time. BOE sent us 'notice of levy' and took money from bank. Can I still re-appeal?

Los Angeles, CA |

We owe sales tax at BOE for a failed business from while back. We're personally liable for the unpaid sales tax and tried to file Offer in Compromise, but was denied (offer amount may have been too little) so we were about to file appeal with slightly bigger offer amount, however, we must have not filed appeal on time, and BOE has already sent me 'notice of levy' and they've took $100 out of our bank (that's all we had).

We don't have assets (only 2 old cars that we need to keep current low paying job or to go to hospital ( i have asthma and diabetes)) and are far below federal poverty income line. We are planning to file chpt. 7 bankruptcy but wondering if that will dissolve this BOE debt and levy. We also have debt with IRS on the business tax as well.

Not sure what to do.

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Attorney answers 2


A BK will not discharge taxes owed to the BOE for sales tax. Depending on many factors a Chapter 7 BK may reduce or eliminate your IRS tax debt. Hopefully, you have filed all your income tax returns timely. If so, generally income taxes that are older than 3 years may be discharged in a Chapter 7 but there are several technical requirements that must be met.

You should immediately and personally consult with a BK lawyer. However, before that consultation will be useful you will need to gather up all available information regarding your debts and income, especially as it relates to your IRS issues, so it can be reviewed and considered as part of your consultation.

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Thanks so much Mr. Daymude! We did file our personal tax returns timely every year and it has been more than 3 years since the BOE debt and IRS debt had been delinquent. Would a credit report show us summary of all debts including IRS and BOE debt? As you can imagine, we're very tight on our money and cannot afford a BK attorney for now, so was planning on filing on our own. Any word of advice would be much appreciated!! Thanks so much for all your help in advance!!!

Michael Raymond Daymude

Michael Raymond Daymude


Have you heard the expression: "Penny wise and pound foolish?" If you do not find a way to afford BK counsel, you are shooting yourself in the foot and perhaps the head. You need to retain a BK attorney to help you. Without it, you will make some very costly mistakes, guaranteed. Your tax situation is complex and a thorough understanding of it is necessary if you want to achieve the best result possible. Consulting an attorney now will allow you to do some pre-bankruptcy planning and your attorney may be able to show you a way to afford the fees. Failure to consult and prepare is preparing to fail -- as Coach Wooden would say.


If the primary reason for contemplating bankruptcy is to discharge your federal tax liability then bankruptcy would not be the best solution. Bankruptcy cannot discharge certain types of taxes. Nondischargeable taxes in bankruptcy include excise tax such as sales tax.

Nondischargeable excise taxes that are claimed by a governmental unit must relate to transactions for which a tax return is last due:
(1) If a tax return is required to be filed then the excise taxes are not dischargeable if they are within three years from when the return is due (plus extension of due date for the return) before filing a bankruptcy petition.
(2) If a tax return is not required to be filed then excise taxes are not dischargeable if they arise from transactions that occurred within three years before filing a bankruptcy petition.

Regarding your business taxes, you have to elaborate on what specific type of taxes are your business taxes. Certain business taxes such as employment taxes are also not dischargeable in bankruptcy.

You should consult a tax attorney to attempt another offer in compromise or try an installment plan. Currently not collectible status is also another temporary solution where the Internal Revenue Service will suspend their collection actions against you because of your financial situation. This allows you time to decide on your best options.

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