Can I stop an IRS audit by filing bankruptcy?
IRS Audit and Bankruptcy
Even though filing a bankruptcy can stop all collection action, it doesn’t prevent the IRS from doing an audit. An audit also extends the time that you can file a bankruptcy. A bankruptcy can only be filed on a tax year 240 days from the time the audit was completed and any additional taxes assessed.
If you are going to file a bankruptcy to discharge your IRS taxes, then an audit is really only going to cause a temporary delay. If you owe more taxes, the silver lining in an audit is that you will also get those taxes settled. The only issue is what to do for the additional 240 days before filing a bankruptcy. In most cases, we put our clients in a non collectible status or an installment arrangement. If you qualify for a non collectible you do not have to make any payments to the IRS. If you are put on a monthly payment plan, most clients make an average of 4 or 5 payments before they can file their bankruptcy.