Many of you who have gotten into financial difficulties while owing a lot of income taxes may have asked yourself this question, “If a tax debt is owed to the IRS can filing bankruptcy settle this debt and allow you to start over?”
Back taxes can be discharged in a bankruptcy under certain federal guidelines. The following is a brief summary of the federal guidelines that must be met before a personal income tax may be discharged in a bankruptcy case:
The tax must be due and owed for a period of more than three years, and the due date of the taxes is more than three years before the bankruptcy case is filed.
The tax return for the tax debt at issue must be filed more than two years before the bankruptcy is filed.
The tax debt issue has been assessed by the taxing authority more than 240 days prior to the filing of the bankruptcy case.
The debtor filing the return must not have attempted to evade the paying of the tax nor can the debtor filing be willfully fraudulent in submitting a return.
The only other way you can get federal income tax relief is through what is called an “offer in compromise.” The term theoretically means a method for resolving IRS back taxes. It involves making payments of a small portion of an outstanding tax bill owed and forgiving the rest.
Contrary to what many taxing services may imply, getting an offer in compromise is relatively rare. Certain conditions have to exist before a taxpayer will be forgiven any portion of the tax bill including penalties and interest on late payments. Most offers in compromise end up with the taxpayer making monthly payments until the tax burden, interest, and penalties are paid in full.
If you have resources of any kind, more than likely, the IRS will demand you pay your back taxes in full plus any penalties and interest. They may allow you to make installments, but they can levy your property by garnishing your wages or repossessing other assets you own if they choose.
Unlike most state officials, the IRS has unparalleled authority to collect its taxes and can often over ride most state laws. It is not very easy to escape a federal tax bill. If it were, people would not pay their taxes.
Otherwise, filing for bankruptcy protection remains a viable option for those of you who have more debt than you can possibly pay back. Bankruptcy laws can be complicated, and common sense indicates you might need a bankruptcy lawyer in order to help you understand how these complex laws may apply in your particular situation.
If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan areas of Albuquerque or Santa Fe, New Mexico, contact us here today at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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