Taxes And Credit Cards
In Florida, we pay our property taxes at the end of the year. On April 15, our federal income taxes for the previous year are due. So, within a 4 to 6 month period we may be hit with property and income taxes. In the last few years, there has been a push by the credit card companies, like Visa, American Express, Mastercard and Discover to allow you to pay your taxes with a credit card.
Don't be fooled they are not doing it because they like you. They are doing it to protect themselves. When the Bankruptcy Laws were changed in 2005, Congress added to the list on non-dischargeable debts. A non-dischargeable debt survives the bankruptcy and is still and owing after the bankruptcy discharge arrives in your mailbox. So, what did our wonderful politicians stick us with this time. Well, Congress expanded credit cards protection. While a separate statute provided the credit card companies protection when people pay income taxes and then file bankruptcy, Congress extended this protection to state and local taxes that are paid with credit cards.
If you are a little behind on your savings (and who isn't), and you use a credit card to pay your state or local taxes, that debt may be excepted from the discharge if you file for bankruptcy protection. I say maybe for a reason. If you think about this for a moment, you will have given it much more thought than our representatives in Washington, and it is easy to see some potential problem spots for this legislation.
First: What if you take a cash advance on a credit card, and pay your taxes with cash. Is that debt non-dischargeable? Second: What if you have multiple credit cards, and you decide to cash advance one or two and make some payments and then use some of the money to pay your taxes? Is that non-dischargeable? Third: What if you pay your property taxes on a credit card and then continue to make payments on the card without incurring new debt? What part of the balance will be non-dischargeable? Good Question. How would you like to be the debtor or creditor at this trial?
The bottom line is this. When a credit card company is offering a convenience to the consumer, hold onto your wallet, there is usually an something in it for the credit card companies.
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, Naples and Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog. Mr. Dellutri also writes for the firm's other blogs: www.faircreditreportingactblog.com and www.fairdebtcollectionpracticesactblog.combankruptcy blog.
