Discharging Taxes in a Bankruptcy

Discharging taxes in a Chapter 7 bankruptcy is one option available to settle your IRS debt. But you have to have all of your ducks lined up ahead of time. Here is a summary of your ducks.

1) Make sure you have filed all of your past tax returns. A return filed by the IRS called a substitute for return (SFR) is not considered a filed return.

2) If all your returns have been filed, they must be filed for at least two years and it must be three years from the due date of the return before a tax year can be discharged.

3) If you have been audited or the IRS has made some adjustment to your return or you have amended the return, it must be at least 240 after the adjustment before that tax year can be included in a bankruptcy.

4) Income taxes are dischargeable but payroll taxes are not.

5) You income must be below a certain amount which depends on your family situation and the year you are filing the bankruptcy. If you have the ability to pay your taxes off by making monthly payments, the bankruptcy option is out.

6) If you have significant equity in assets like a business, home or investment property, those assets will prevent you from filing a bankruptcy to discharge your taxes.

If you are considering filing a bankruptcy, I offer a free consultation to evaluate all of your settlement options. I will refer you to a bankruptcy attorney who is the only one qualified to determine if you can file a bankruptcy. I can determine what taxes will be dischargeable in the bankruptcy and get written proof from the IRS.

Scott Allen E. A. in Mesa AZ

Tax Debt Advisors, Inc Since 1977