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Getting Tax Debt Discharged in Bankruptcy: 4 Requirements Your Debt Must Meet

Posted By admin || 15-Mar-2013

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If you're wondering whether you can get can tax debt eliminated in bankruptcy, you'll need to review several factors to learn if your debt qualifies.  Chapter 7 and Chapter 13 bankruptcies may help you deal with your debt in different ways.  In order to understand your options in detail and learn if bankruptcy is an option to consider, review your situation with a bankruptcy attorney or tax expert.

Debtors are often confused about tax debt and bankruptcy, with many under the impression that you cannot discharge or eliminate tax debt. The truth is, certain debts may qualify but it must follow a specific criteria.

  1. Tax debt should be accessed by the Internal Revenue Service (IRS) with 240 days of filing for protection.
  2. The tax return related to the outstanding debt was due at least 3 years before filing.
  3. Tax returns have been filed within the last two years.
  4. No tax evasion or fraud attempts were made by the debtor.

Chapter 7 bankruptcy can eliminate or discharge debt that meets necessary requirements.  Chapter 13 bankruptcy may help you deal with tax debt that doesn't qualify for discharge.  With Chapter 13 you may be able to repay what you owe without penalties or interest, making your payments more affordable. The 240 day assessment may vary if you had an offer in compromise pending. Specifications may also vary if you have a tax lien. You may need to provide proof of filing previous tax returns before filing your petition.

 

Reference:  http://www.jamesmonroepa.com/Practice-Areas/Can-Tax-Debt-Be-Discharged.shtml

http://taxes.about.com/od/bankruptcy/qt/bankruptcy_tax.htm

Categories: Debt and Tax Relief
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