Bankruptcy can solve tax problems

0119-us-latestnewswires-taxforms_full_600HOW TO SOLVE YOUR TAX PROBLEMS

If you owe tax debts, there are a number of ways to solve the problem and keep the IRS and DOR from taking further action against you. Many times, bankruptcy can end the stress associated with owing taxes by either wiping out the debt completely or allowing you to structure a meaningful repayment plan.


The interaction between the tax code and the bankruptcy code can get complex fast — like two ocean liners on a collision course. So it can be helpful to have the advice of someone with a plan to steer to safety!


In bankruptcy you can wipe out a liability for income taxes if they are considered non-priority debts.

So what’s a non-priority debt? You must meet the following rules:

*Your tax returns must have been due three years or more before the bankruptcy case was filed.

*Your tax returns must have been actually filed more than two years before the bankruptcy case filing date.

*The tax you owe must not have been assessed against you by the government within 240 days before the case is filed. (It’s fairly rare to see this one).

*Your tax returns must have been truthful and not fraudulent and, you must not have been intentionally attempting to evade or defeat the tax when you failed to pay.

In order to sort out how your returns fall into these categories, it’s best to get in touch with a bankruptcy lawyer who knows this part of the code. Together, we can gather the information we need to see how much of your tax debt can be wiped out.

Excise taxes such as estate and gift taxes, gasoline and special fuel taxes, gambling winnings, and state sales taxes, and custom duties are subject to a separate analysis from income taxes.

If your tax debt does not meet the test for getting wiped out (often because it’s a recent tax from 2011 or 2012), it can still be handled through a Chapter 13 bankruptcy. This will involve paying the tax in full through a court-approved repayment plan. The good news is that interest on all unsecured tax claims in bankruptcy stops accumulating immediately upon the filing of the case. Unsecured priority taxes are paid, then, without interest accruing or continued penalties after the filing of the Chapter 13 bankruptcy.


There are other issues when it comes to taxes: tax liens, un-filed returns, and offers-in-compromise can throw a monkey wrench into the works. To get a trained eye on whether bankruptcy will solve your tax problems, just call me during normal business hours for a free, no-obligation consultation. The number is 978-975-2608.