Will Bankruptcy Eliminate Your Tax Debts?

Tax debt can cause significant problems. If you owe back taxes, you will be hit with penalties and interest will continue to accrue. The IRS can start collections actions against you, including selling your property, garnishing your wages and invading your bank account.

There are ways to negotiate with the IRS, but sometimes it’s not enough to give you the relief you need. In certain circumstances, filing for bankruptcy may be the answer.

Some Tax Debts Are Dischargeable, Others Are Not

Discharging back taxes through bankruptcy is a difficult and complex process. Because very specific rules govern whether a tax debt is dischargeable in bankruptcy, having the guidance of an experienced tax lawyer is extremely important. In general, tax debts fall into one of three categories:

  • Priority, nondischargeable debts are taxes less than three years old, filed by the taxpayer less than two years ago, and taxes that were assessed within 240 days of the filing date.
  • Nonpriority, nondischargeable debts includes taxes from returns that have not been filed, or those filed late within the past two years, taxes from fraudulent returns or taxes owed by reason of evasion.
  • Nonpriority, dischargeable debt: If a tax does not fall into one of the above two categories it is considered a nonpriority, dischargeable debt. In general, this means your tax debt is dischargeable through bankruptcy if:   
    • It is more than three years old
    • It is for income taxes
    • The taxes were filed by you over two years ago
    • The tax was assessed more than 240 days before you filed for bankruptcy
    • You did not commit tax evasion, tax fraud or file your taxes under protest

Contact Me For More Information About Tax Debt And Bankruptcy

I am attorney Brian Coggins. I help taxpayers in Roseville, California, and throughout the Sacramento area resolve their tax issues.

No matter how complex your tax issue, my goal is the same: to stop IRS collection action and resolve your tax issue in the most economical and efficient manner possible. I use a variety of tools, including bankruptcy, to accomplish this and get you the relief you need.

Find out if filing for bankruptcy is a good solution to your tax debts. Contact my office online today or call 916-270-2895. I will meet with you for free, review your circumstances and advise you of your options. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.