By Columbia-Lexington Bankruptcy attorney Lex Rogerson
Those of us who mostly represent consumers in bankruptcy don’t often work hand-in-hand with the “tall building lawyers”: those in big firms that usually represent banks and other businesses. But most bankruptcy lawyers in South Carolina know about one special lawyer in one of the biggest firms — and those who don’t know him need to.
Erik Doerring, a shareholder in the McNair Law Firm, is an experienced general tax lawyer. Nothing unusual about that; there are lots of them around. What makes him really special, besides being one of the smartest people you’ll ever meet, is that he is recognized as the guy to see about tax issues relating to bankruptcy.
It’s no secret that bankruptcy and tax law can interact in several different ways. Depending on the situation, bankruptcy can be a powerful tool for pacifying the IRS. As we’ve discussed elsewhere, a complex set of rules, most relating to timing, determine when a debtor can discharge past-due tax obligations by filing bankruptcy. When debtors use bankruptcy to reorganize debt, taxes usually have priority over other debts, so dealing with tax obligations is often a major strategy hurdle in chapter 11 and chapter 13 plans. And tax liens, which can transform taxing entities into secured creditors, raise a whole different set of issues.
When the South Carolina Bankruptcy Law Association needs someone to train members on using bankruptcy to deal with taxes, as it did at its annual seminar in May, Erik is the go-to guy. Many of us consult with him regularly, sometimes in a five-minute phone call and sometimes in a two-hour conference. Sometimes it’s a strategy session to figure out whether bankruptcy or some other approach, like an offer-in-compromise, is best for the client. No matter how it comes down, Erik’s a master of making the arcane structure of the Internal Revenue Code understandable.
On another front, the discharge of debt can have tax consequences. When a creditor simply charges off a debt, the amount forgiven can sometimes be taxable as ordinary income. An unexpected 1099 for several thousand dollars of written-off debt can be an awfully unpleasant surprise. By contrast, discharging debt in bankruptcy does not result in taxable income, but it can affect the debtors’ “tax attributes” — a confusing tax term meaning that taxes could indirectly be increased in the future. Those of us who frequently suggest our clients seek advice about those tax consequences can do so only because Erik taught us about that. We are better lawyers because of him.
Smart, experienced, ethical, pleasant, and always professional — Erik is just what we all look for in a lawyer. I’m proud to call him my friend.
Erik Doerring can be reached by e-mail at email@example.com.