GET RID OF TAXES IN BANKRUPTCY
YOU CAN GET RID OF IRS TAXES IN BANKRUPTCY
If you are unable to pay your overdue personal income taxes, are struggling to make ends meet to avoid garnishment from the government, bankruptcy may help you get rid of those taxes.
Other taxes such as excise, sales and other fiduciary taxes are non-dischargeable in bankruptcy. Although technical, discharging personal income taxes in bankruptcy is possible. Here are the requirements.
5 REQUIREMENTS FOR DISCHARGING PERSONAL INCOME TAXES IN BANKRUPTCY
TWO YEAR RULE: The tax return or equivalent report was filed or given at least more than two years before the filing of the bankruptcy petition. 11 U.S.C. 523(a)(1)(B);
THREE YEAR RULE: The most recent due date of the return is more than three years prior to the filing of the bankruptcy petition. 11 U.S.C. 507(a)(8)(A)(i);
240 DAY RULE: The tax was assessed more than 240 days prior to the filing of the bankruptcy petition plus 30 days. 11 U.S.C. 507(a)(8)(A)(ii)
Does not include time that an Offer in Compromise was pending or in effect during that 240 day period plus 30 days. 11 U.S.C. 507(a)(8)(A)(ii)(I)
Does not include any time during which a stay of proceedings against collections was in effect in a prior bankruptcy case during that 240 day period plus 90 days. 11 U.S.C. 507(a)(8)(A)(ii)(II)
NON-FRAUDULENT RULE: The tax return was non-fraudulent. 11 U.S.C. 523(a)(1)(C)
NO ATTEMPT TO EVADE OF DEFEAT THE TAX: The taxpayer is not guilty of a willful attempt to evade or defeat the tax. 11 U.S.C. 523(a)(1)(C)
ARE TAX LIENS DISCHARGEABLE IN BANKRUPTCY?
Even if you meet the five rules above to get rid of your personal liability on those personal income taxes, if there is a federal tax lien perfected on your property, the lien remains.
However if the lien was not perfected, then it may be voidable.
WHAT TO DO BEFORE SCHEDULING YOUR
TAX DISCHARGE BANKRUPTCY CONSULTATION
Call the Internal Revenue Service at 800-829-1040 and request an “Account Transcript” for each tax year there is a balance. The I.R.S. does not charge for this.
Please note an “account transcript” is a special transcript filled with I.R.S. codes. You do not need a copy of your actual return nor do you need any other type of transcript.
Once you have your account transcript(s), take the next step by Scheduling
Your TAX DISCHARGE BANKRUPTCY CONSULTATION.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. Federal Tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or matter addressed herein.