January 19, 2013 (Press-News.org) Discharging tax debts through bankruptcy
In many cases, people who are overwhelmed by unmanageable income tax debts are able find relief by filing for bankruptcy. However, not all tax debt can be discharged in bankruptcy. It is important to understand the basic requirements when weighing the options for dealing with tax debts. Other debt relief solutions may be available for those whose tax debts do not qualify for discharge in bankruptcy.
When can tax debt be discharged in bankruptcy?
Even if a person has other debts that qualify for discharge during bankruptcy, it does not automatically mean that his or her income tax debts will also be dischargeable. Also, because tax debts are considered separately according to each individual tax return and tax year, it is possible for some tax debts to be dischargeable while others are not.
Generally speaking, an income tax debt must meet several criteria to be eligible for discharge during bankruptcy:
-The tax return was due at least three years ago. A tax debt cannot be discharged in bankruptcy until at least three years after the day that the tax return was due. The due date includes any extensions that were filed in relation to the return.
-The tax return was filed at least two years ago. Tax debts arising from unfiled tax returns cannot be discharged in bankruptcy.
-The tax debt was assessed by the Internal Revenue Service at least 240 days ago. An IRS assessment, or formal recognition, of a tax debt may arise from a self-reported balance due or as a result of a tax audit. Tax debts cannot be discharged in bankruptcy until at least 240 days after an IRS assessment of the debt.
In addition to the above requirements, tax debts cannot be discharged through bankruptcy if the underlying tax returns were fraudulent, or if the taxpayer has been found guilty of tax evasion.
What other options are there for dealing with tax debt?
For people whose tax debts cannot be discharged in bankruptcy, there are other options that may provide relief. For example, it may be possible to work out a more manageable payment plan with the IRS, renegotiate the collection date, or even settle a tax debt for less than the amount owed. Additionally, even if a tax debt does not qualify for discharge during bankruptcy, the elimination of other debts through bankruptcy can help make the process of paying off a tax liability more manageable.
Seek legal advice
This article provides an introduction to some basic considerations when dealing with tax debt, but the laws governing bankruptcy and taxes are extremely complicated and constantly changing. It is important for people considering bankruptcy to discuss their specific circumstances with a knowledgeable tax attorney who can advise them of their options and help select the course of action that will best meet their needs.
Article provided by Levitt & Slafkes, P.C.
Visit us at http://www.levittslafkes.com
Discharging Tax Debts Through Bankruptcy
For people who are unable to pay of their overdue taxes, bankruptcy may provide a way to get out of debt.
2013-01-19
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[Press-News.org] Discharging Tax Debts Through BankruptcyFor people who are unable to pay of their overdue taxes, bankruptcy may provide a way to get out of debt.