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Steps to Successfully Discharging Income Taxes in Bankruptcy

by | Mar 31, 2015 | Bankruptcy Lawyer

Income tax is the only tax debt that can be discharged in bankruptcy and it can only be done if you meet certain requirements. Before you file your documents with the court in hopes of Discharging Income Taxes in Bankruptcy, you’ll need to be sure you filed a tax return and that the tax debt is at least three years old. In many cases, you cannot discharge income tax debts if the IRS filed a return on your behalf because you failed to file it on your own. However, an attorney who focuses on bankruptcy law will be able to tell you if you might qualify for an exception.

It is important to note that although Discharging Income Taxes in Bankruptcy is possible, it is not possible to discharge payroll taxes or those you acquired due to fraud. If you have these other types of tax debts, you may be able to include them in a Chapter 13 debt reorganization plan but you will have to pay them off completely in order to settle your debt with the IRS and get any existing liens cancelled.

Bankruptcy will also not help if you wilfully attempted to evade paying your taxes. While the IRS may make payment arrangements with you to help you pay off your debt, you will not be able to erase it without paying the amount you owe. If you have other debts that are making it hard for you to make payments to the IRS, bankruptcy might still be a good option for you. Eliminating other debts may help you have more money on hand to settle your tax obligation so you can move on with your life.

An experienced bankruptcy attorney might evaluate all of your debts and help you determine the most appropriate way to get rid of your outstanding tax debts. For those who meet the qualifications, Discharging Income Taxes in Bankruptcy might be a good choice. With the heavy income tax burden off of your shoulders, you won’t have to be worried that the IRS will seize your property or your future income tax refunds.

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