There are a number of ways to resolve tax problems. Sometimes, the best answer is to discharge taxes in bankruptcy.
The “b word” sounds scary to people. It shouldn’t. Bankruptcy is a financial tool and a constitutional right. While we can often use certain techniques like penalty abatement to reduce or eliminate your penalties, ordinarily, you will still be left with something to repay. But, if you discharge taxes in bankruptcy, you can potentially eliminate all of your tax debt leaving you with no repayment plan at all.
Can you discharge taxes in bankruptcy?
Yes, in some cases. The tax dischargeability rules are very complex. Generally, we can discharge income taxes due more than three years ago provided that the returns were filed more than two years ago. However, we know the ins and outs of whether you can discharge taxes in bankruptcy – not only from the bankruptcy side, but also from the tax resolution side.
When we have a client with tax issues, we first perform a full tax dischargeability analysis. We determine whether we can discharge taxes in bankruptcy or not. It’s possible that some of your taxes are discharged whereas others are not. If that’s the case, we would develop a strategy for dealing any taxes that we cannot discharge in bankruptcy. Sometimes, we can use an Offer in Compromise or a financial hardship plan. Other times, we simply need to have get your federal tax lien released.
Can you discharge taxes in Chapter 7 bankruptcy?
Yes, some taxes are dischargeable in Chapter 7 bankruptcy. Generally, we can discharge income taxes due more than three years ago provided that the returns were filed more than two years ago.
There are a few notable exceptions though. If your tax return was filed late, it’s possible that you may not be eligible to discharge taxes in bankruptcy. Additionally, liens are retained in a Chapter 7 bankruptcy so even if we discharge taxes in bankruptcy, the IRS would retain its lien until it expired.
Can you discharge taxes in Chapter 13 bankruptcy?
Yes, some taxes are dischargeable in Chapter 13 bankruptcy. Generally, we can discharge income taxes due more than three years ago provided that the returns were filed more than two years ago.
Like with Chapter 7 bankruptcy, there are a few notable exceptions though. If your tax return was filed late, it’s possible that you may not be eligible to discharge taxes in bankruptcy. You will also have to address any tax federal tax liens in the Chapter 13 Plan. If you have taxes you cannot discharge in bankruptcy or if you have a lien that cannot be resolved, you may be able to simply pay the debt in your Chapter 13 Plan.
How can I find out if I can discharge taxes in bankruptcy?
The rules for determining whether taxes are dischargeable are complex and can be confusing. Many bankruptcy attorneys don’t even fully understand the rules. We are not most bankruptcy attorneys. We are tax resolution attorneys. We not only can assist you in filing bankruptcy, but we can confidently tell you whether your tax debts are dischargeable. Moreover, we can provide you with a detailed report regarding bankruptcy dischargeability during our initial tax account transcript review.
Here’s a sample bankruptcy dischargeability analysis that we provide to our client:
Each case is different, so it is impossible to tell you the best method to resolve your case without us performing a detailed tax transcript analysis. We would review this report with you, explain your tax liability, explain which taxes we can discharge in bankruptcy, and which taxes we cannot discharge in bankruptcy.
After we’ve reviewed your tax account transcript with you, we would provide you with some options to resolve your particular tax issue. Sometimes, that solution is bankruptcy.
Contact us for your tax dischargeability analysis to find out if you can discharge taxes in bankruptcy
Call now to schedule your tax account transcript analysis so we can start you on your path to relief. Take back control of your financial future. Providing both immediate relief and long-term solutions, tax resolution could be the answer you have been looking for. Our tax attorneys strive to make this process as easy as possible by offering flexible payment options and financing.
Contact our law office today to schedule a free consultation! Call or reach out to your closest office:
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The best part is that we can start the whole process over the phone or by video conference so you don’t even need to come into the office! We make everything as easy as possible for you from start to finish. Call us today.