According to chapter 13 and chapter 7 of the Bankruptcy code, income tax is eligible for discharge. Although there are numerous different ways of getting out of a tax debt, most people find filing for bankruptcy to be one of the most appropriate ways among the five major methods. However, the only time you may consider bankruptcy is when you meet all the requirements for tax discharge. To be safe, you can hire lawyers to assist you legally with Discharging Income Taxes in Bankruptcy.
You will want to know that chapter 13 outlines the payment plan for repaying some of your debts while demonstrating how the remaining debts will be discharged. On the other hand, chapter 7 of the bankruptcy code outlines how the allowable debts could be discharged fully. However, the new bankruptcy laws outline the above in a different way, whereby the tax debts receive similar treatment both in chapter 13 and chapter 7 petitions.
It is important to note that some tax debts may not be discharged in bankruptcy. The tax debts would only be discharged once the petitioner’s tax debts have met the following five criteria:
- The tax assessment has reached the 240 days’ stage
- It is a rule that the taxpayer should file for bankruptcy once the IRS has first assessed the tax at the stage of 240 days.
- Taxpayer is not guilty of tax evasion
- The taxpayer should not be considered guilty of any deliberate move that aims at evading the tax laws.
- Tax return was filed two years ago or earlier than that: The tax debt should be equivalent or related to a tax return, which you filed two years before the taxpayer thought of filing for bankruptcy.
- The tax return was filed three years ago
- The tax debt needs to relate accurately with the tax return that became due three years prior to the filing of the bankruptcy by the taxpayer.
- The tax return had no fraudulent issues
- It is lawfully indicated that the tax return cannot be frivolous or fraudulent.
The Office of Law Margulies has for over 25 years helped many clients in matters of Discharging Income Taxes in Bankruptcy.
1 person likes this post.