Florrisant Bankruptcy Lawyers Discuss Tax Debt
One of the most common reasons people file bankruptcy with bankruptcy lawyers in Florrisant is tax debt. IRS penalties and interest can mount up to unimaginable levels on small amounts owed and resolving this with the IRS can often prove a time consuming and intimidating experience. However, with the new reforms enacted in 2005, Congress made it more difficult to rid oneself of this debt in part or whole. Bankruptcy attornyes in Florrisant are well trained and experienced in the new bankruptcy reforms.
Most tax debt can’t be discharged with a Chapter 7 or Chapter 13 bankruptcy, despite extraordinary claims on television and the internet. In a Chapter 13, you will still owe the tax debt at the end of your bankruptcy and the amount will be part of your monthly payments. In a Chapter 7, some of this debt may be wiped out only if the debt meets certain criteria:
• A tax return was filed on the debt – The tax debt you wish to discharge must have had the appropriate returns filed at least two years before filing a bankruptcy petition.
• The taxes owed are income taxes – trustee taxes (payroll taxes), penalties and other types of taxes are not eligible for discharge.
• The tax debt is at least three years old – the debt you want to discharge must have been owed for at least three years before the bankruptcy was filed.
• No fraud or willful evasion – if you filed a fraudulent income tax return or other wise committed fraud, such as willfully evading paying income taxes, bankruptcy will not discharge any debt associated with this.
• The 240 day rule – the IRS must have assessed this income tax debt at least 240 days before the bankruptcy petition is filed or the debt must not have been yet assessed by the IRS. If the IRS stopped the collection of this debt because of an offer in compromise or a previous bankruptcy filing, this deadline may be extended.
Unfortunately, any recorded federal tax liens will stay on your record even if the taxes themselves are discharged and your obligation to pay them absolved. The bankruptcy does prevent the IRS from collections procedures on the discharged taxes, however, if you intend to sell the property on which the lien is recorded, you will still have to pay off the lien. Contact Florrisant bankruptcy lawyers for more information on tax debt.
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