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Philanthropist says bankruptcy was best option for IRS debt

An IRS investigation concluded that an out-of-state philanthropist and his late brother are on the hook for billions of dollars in back taxes. He contested the allegations, but a jury ultimately found that both of the brothers hid some of their assets. While an audit from the IRS certainly can occur for Washington tax payers, not everyone may be aware bankruptcy might be a viable solution for this type of debt.

Sam Wyly and his brother Charles were the subject of a 10-year-long IRS investigation. Although the latter of the two suffered fatal injuries in a car wreck back in 2011, a jury determined that both of the men were responsible for tax fraud in 2014. Charles Wyly's estate is responsible for over $100 million in fines as well as approximately $1 billion in back taxes.

Accused of keeping some of his income in offshore trusts, the surviving brother was slammed with nearly $200 million in fines on top of his own back taxes, which -- according to the IRS -- totals about $2.03 billion. However, the financial burden of litigation and the costly fines quickly became too much, and debt relief became necessary. Following the approval of these fines in Feb. 2015, he filed for bankruptcy.

He continues to assert his innocence, pointing out that he forked over $160 million to the IRS in the past two decades. His brother, he said, paid about $80 million. Due to what he believes is an unfair assessment by the IRS and significantly large fines, bankruptcy was the best solution to handle his situation. Although the IRS was able to make a claim in Bankruptcy Court, the process may still alleviate some of the philanthropist's sudden, devastating debt. Even the most well-off Washington residents can face unexpected or unfair circumstances that result in a financial crisis, making bankruptcy a responsible choice for confronting the issues.

Source: Forbes, "IRS Seeks Record $2 Billion In Back Taxes From Prominent Businessman And Philanthropist Sam Wyly", Tony Nitti, April 18, 2015

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