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Bankruptcy and IRS tax debts

F. Lee Bailey, the famed lawyer who served as counsel for football legend O.J. Simpson during his 1995 murder trial, has filed for bankruptcy. The lawyer says that his debts exceed $5 million and most of them relate to overdue IRS bills.

Bailey rose to fame after helping to successfully defend Simpson in his murder case, where Simpson was accused of murdering his wife and a friend. In spite of the highly controversial nature of the case -- particularly the fact that Simpson's guilt appeared self-evident -- Simpson was acquitted of the charges. Before that, Bailey defended an alleged drug kingpin, Claude Duboc, against marijuana smuggling charges. Duboc was later convicted.

Now 83 years of age, Bailey discussed his bankruptcy filing in a telephone interview, saying that most of the IRS debt he faces relates to his work on the Duboc case. Bailey received the shares of a Canadian pharmaceutical company as payment for his legal services in the matter. Bailey said that the U.S. government approved the payments, but later rejected them when the stock price soared in value. Alleging that Bailey was acting as the company's trustee, the government reclaimed money relating to the shares. For the last 22 years, Bailey says he has been battling the IRS over the proceeds from the pharmaceutical shares.

Debts owed to the IRS are some of the most difficult for a Kentucky resident to dissolve. However, in some circumstances, it is not impossible to resolve tax debts. Since every bankruptcy matter is unique, Kentucky residents with unaffordable tax burdens may wish to discuss their debt situations with experienced tax and bankruptcy attorneys to determine what their legal rights and options are.

Source: Boston Globe, "Famed lawyer F. Lee Bailey files for bankruptcy," June 26, 2016

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