IRS debts can be extremely problematic. Paid, or unpaid, income taxes are common IRS debts. Even though a debtor owes only a few hundred dollars, it may feel like a heavy financial burden.
Fortunately, filing for bankruptcy is a simplified way to stop IRS harassment like this. It can be a viable option for resolving IRS debt. While not all IRS debt is dischargeable in bankruptcy, you can get the debt relief you need.
Tax Relief Eligibility
State and federal taxes can be difficult to understand for a common person. Discharging taxes can be somewhat perplexing, an experienced bankruptcy attorney has the insight and expertise to expertly guide you through this complicated process. When filing for bankruptcy, it is possible to get rid of money owed to the IRS. You may be able to discharge all or most of the IRS debt you owe based on when you file the case and how old the debt is. Tax debts can be eliminated or restructured through Chapter 7 and Chapter 13 bankruptcy.
The following requirements must be met in exchange for tax debt to be dischargeable:
- At least 3-year-old debt;
- questionable tax returns must have been filed at least 2 years before the bankruptcy;
- the tax assessment must have occurred at least 240 days before the bankruptcy; and
- the filer has not been involved in tax evasion or tax fraud.
The type of bankruptcy under which an individual chooses to file has an impact on which tax debts can be discharged. For instance, income taxes are generally the only type of tax debt that can be discharged under Chapter 7. Certain tax debts, such as tax liens and immovable property taxes, might not be discharged in bankruptcy. When you hire an expert Florida bankruptcy attorney, the attorney will understand more about your condition and assist you in understanding your options.
Other important considerations
If you are eligible for a discharge but the IRS has since filed a lien against your property, the situation is more complicated. Liens cannot be pardoned under Chapter 7 and must be settled outside of the bankruptcy filing. The IRS cannot come after the amount you owe through your bank accounts or wage garnishment after you file for bankruptcy; instead, you will be liable to repay what you owe through the sale of your assets during the process of bankruptcy.
Under Chapter 13, a person must still re-pay taxes they owe, but the amount may vary depending on certain criteria and financial circumstances. This applies whether the tax debts were filed as a priority claim or as a non-priority unsecured claim.
Property taxes, trust fund taxes, sales taxes, certain employment taxes, and non-punitive tax penalties incurred less than three years before filing for bankruptcy are examples of non-dischargeable tax debts.
What if Tax Debt isn’t discharged?
If your taxes cannot be fully discharged, you can get some relief by setting up a tax payment plan that allows you to repay the taxes at a lower interest rate than the IRS might otherwise charge. Our bankruptcy lawyers at Marrero, Serrano, Farah Law, LP may also be able to reduce your IRS penalties. Filing for bankruptcy can also halt an IRS foreclosure action to collect back taxes.
Consult a Florida Bankruptcy Attorney
If you decide to file for bankruptcy to eliminate your unpaid taxes and other debts, you have several options to consider. Consult with a knowledgeable Florida Bankruptcy Attorney at Marrero, Serrano, Farah Law, LP to help you decide the best way to file for bankruptcy to discharge your tax debts.
References for personal use