Bankruptcy May Help You with Tax Debt
Hi, Matt McArthur, attorney at Clear Counsel Law Group. Today we're going to be discussing whether or not chapter 7 is a useful mechanism for helping you get rid of IRS tax debt.
The simple answer is that yes, chapter 7 can get rid of tax debt.
It's generally thought that tax debt is untouchable but in some circumstances bankruptcy can actually help you eliminate that type of debt.
Now, there are several requirements that must be met in order for that debt to be considered dischargeable, meaning that the debt can be wiped out in your bankruptcy.
The first requirement is that it must be for a tax debt that was due and owing more than 3 years ago.
A Tax Debt Example
For example, if you owe for the tax of your 2012 and you filed your taxes April 15, 2013 the following year you would have to count forward 3 years from April 15, 2013 to determine whether or not you satisfy that 3 year requirement.
The next requirement is that you have to have filed a tax return, the IRS cannot file a substitute return for you and you still be able to meet this requirement.
And you have to have filed at least 2 years before you filed bankruptcy.
The next requirement that you must meet is that there cannot have been any reassessments of the tax debts within the last 240 days.
An example of this would be where the IRS discovers some piece of information or some modified piece of information related to your income or your tax obligations for that particular tax year.
If they go in and recalculate the numbers that's considered a reassessment.
If you meet all of those requirements though, older than 3 years, filed your tax return more than 2 years before you filed bankruptcy and there's been no reassessments regarding that tax debt for that tax year in the last 240 days you may be eligible to discharge this tax debt in a chapter 7 bankruptcy.
Now this is a very complicated issue, you're probably going to want the help of a professional to help you navigate these issues.
Please come in and do a consultation with me, I'll be happy to discuss your particular situation and I look forward to hearing from you soon.