Will Filing Bankruptcy get rid of your Income Taxes, I.R.S. Tax Debt, and Tax Liability?
If you owe the IRS for personal income taxes or any other tax liability, contact the Texas Bankruptcy Attorneys at The Law Offices of R.J.Atkinson for a free bankruptcy evaluation and a free bankruptcy means test to help you determine how to deal with your Taxes in bankruptcy. Whether you are eligible to file for Chapter 7 Bankruptcy and can completely eliminate your personal income tax liability, or you decide to file for Chapter 13 Bankruptcy to repay your taxes over 3 to 5 years, filing for bankruptcy can be an option to deal with IRS Tax liability.
Owing IRS Taxes can be emotionally stressful and financially draining. Dealing with the Internal Revenue Service can also be a challenge, especially when there are so many IRS Tax rules and regulations to consider. In addition to IRS tax problems, if you are facing other financial problems such as a foreclosure, a lawsuit, or mounting credit card bills, that can motivate you to consider filing bankruptcy. Filing bankruptcy can immediately stop the IRS and most other creditors from collection actions. Depending on your situation, filing bankruptcy may allow you to completely get rid of your tax debt, or reorganize it on your terms with Bankruptcy Court approval. In many cases, bankruptcy can be the best option to get rid of certain IRS tax debt or to force the IRS to accept a repayment plan on terms you can afford as opposed to terms the IRS may impose on you.
It is a common misconception that debts for IRS taxes cannot be discharged in bankruptcy. There are some very qualified tax professionals which adhere to this misconception that debts are non-dischargeable in bankruptcy. Their misconception may be due to the fairly complicated legal restrictions, timelines, and definitions that limit the taxes which qualify for discharge. It’s also possible that the latest changes to the Bankruptcy Code which were publicized in the media as the end of bankruptcy, may have further confused their already misguided belief. Whatever they may believe, taxes can be addressed and even discharged in bankruptcy.
Bankruptcy and Taxes can be a complicated subject. Whether or not taxes can be discharged in bankruptcy is something to be determined on a case by case basis. Many books have been written on taxes and their dischargeability in bankruptcy, so you can imagine that subject is too complicated to thoroughly explain without knowing the specifics of a particular case. That being said, there are three general conditions which may allow for income taxes to be dischargeable in bankruptcy.
- Your taxes must have been filed two years before you actually file for bankruptcy.
- The taxes you owe must be three years old before you file a bankruptcy petition. In other words, the taxes must have become due at least three years before you file, which is April 15th of the year following the tax year for most people.
- 240 days must have passed from the time the taxes were assessed. That means 240 days from the time the IRS determined that you owed money.
Although you might think the above conditions may seem easy to figure out or that you may meet the conditions with no problem, the tax liability may still be considered non-dischargeable in situations where the IRS can show you tried to evade the taxes, filed a fraudulent return, or did anything else that could be construed as fraud or tax evasion.
Using bankruptcy as a tool to eliminate, reduce, or repay taxes can be a good option when other tax solutions aren’t feasible. If your taxes cannot be discharged in bankruptcy, filing bankruptcy can force the IRS to accept repayment plan on your terms. If you dispute the amount due or there is a disagreement about liability or penalties, the Bankruptcy Court can be an excellent forum to address tax disputes. You may even be able to completely eliminate your tax liability if you meet the conditions to do so.
If you owe the IRS for personal income taxes or any other tax liability, contact the Texas Bankruptcy Lawyers at The Law Offices of R.J.Atkinson. We offer a free initial evaluation of your tax case, and can help you determine how to deal with your IRS debt in bankruptcy. If bankruptcy is not an option to address your tax liability, we may be able to help you address your tax problems with tax resolution services outside of bankruptcy.
Bankruptcy May Get Rid of Some Personal Income Tax Liability…