Let’s roll back the clock a bit. Assume it is 2003, and you are in the middle of filing your taxes. You realize that, for one reason or another, you did not pay enough in taxes for that year. Instead of getting a nice refund, you now owe Uncle Sam a sum of money that you do not have. What is the best thing to do in this situation? Without a doubt, you still should file your taxes. Even if you cannot send payment with your return, filing your taxes and not paying immediately will put you in a much better position than not filing at all.
The IRS might take a few years to realize the shortfall. You can be assured that by the time the IRS decides to try to collect the tax from you, the original amount you owed will have increased significantly, due to penalties and years of interest accruing. It would even be safe to say that the small sum of money you owed the IRS in 2003 has now doubled, or even tripled in size. Dealing with the IRS can be a very scary situation. You did not file fraudulently, you did not file late, and the tax due is more than three years old. Do you have any options? Can bankruptcy help you in this situation?
With the help of a qualified bankruptcy attorney, yes it can! You may be able to get a discharge of your tax debt under certain circumstances. With a skilled bankruptcy lawyer by your side, it is certainly possible if the debt meets certain criteria. The tax year in question must have been filed in a timely manner, and without the intent of fraud. The tax liability also must be more than three years old in order to qualify for discharge. In addition, the IRS must not have assessed your liability for the tax debt within 240 days prior to your bankruptcy filing date. If you have not received the formal notice of assessment from the IRS within 240 days of your filing date, you should be eligible.
Although you may feel guilty about not paying your tax debt, there is little reason to feel this way. Most working people, over the course of their lifetimes, pay more than their fair share of property taxes, income taxes, sales taxes, and utility taxes. You should not feel guilty for not being able to pay your tax debt. You should feel proud to live in a country that allows responsible, hardworking citizens to have a second chance when they fall on hard times. It can be very easy to make a mistake with today’s overly complicated and bulky tax code, as well. If you have a tax debt that you cannot pay, bankruptcy may be the solution you need. Contact a lawyer in your area today to find out if your tax debt can be discharged.