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Dionne Warwick hopes to get rid of old taxes through bankruptcy

Music fans in New Jersey may not know that singer Dionne Warwick has been battling with the Internal Revenue Service over her taxes for about 15 years now. The on again and off again battle began in the 1990s. Now, she has come to a point where filing for bankruptcy may finally free her from tax liens of the past.

Apparently, Warwick had a business manager whose maladministration of her finances led to the IRS filing tax liens against the singer. Warwick's attorney has said that since that time, she has annually filed her taxes and worked out deals with the IRS on payment. By 2009, it was thought she owed somewhere in the neighborhood of $2.2 million; however, the IRS refiled the tax lien which at that time that indicated that the amount was more like $1 million.

Any payments that Warwick made went to interest and penalties. This has led to little reduction of the principal amount she owed to the IRS. For these reasons, Warwick has decided to file for Chapter 7 bankruptcy. According to court documents, her monthly income is $20,950 and her expenses are $20,940.

The general rule is that taxes are not eligible for discharge in bankruptcy. However, certain taxes may be discharged in a Chapter 7 bankruptcy if they are old enough. Only those tax liens that fall before a certain date, which varies from case to case, may be eligible for discharge. The filer would still be responsible for any valid tax liens after that same date. Anyone in New Jersey has is struggling with tax liens may want to seek advice to see if they may be able to wipe away at least some of his or her tax liability in a Chapter 7 bankruptcy.

Source: Atlanta Black Star, "Dionne Warwick Files for Bankruptcy to Clear IRS Tax Liens," March 26, 2013

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