IRS Taxes In Bankruptcy

IRS Taxes In Bankruptcy

IRS Taxes In Bankruptcy

The IRS taxes in bankruptcy reform was passed into law in 2005. This new law makes it almost impossible to get rid of tax debts in bankruptcy proceedings. This is not to say it's impossible, just harder, and more rules to follow.

It is imperative to have an attorney if you are considering your IRS taxes in bankruptcy. There is a form that has to be turned in, and that form is a Substitute for Return or SFR for short.

If our taxes are less than three years old, they can not be discharged in bankruptcy. And of course there is the decision to make. Do I need file Chapter 7 ,or Chapter 13? It's all very complicated, and that is why your tax representative must know all laws pertaining to your case.

One more thing you should be aware of is, just because you may have gotten some of your taxes discharged, it does not mean you won't lose other assets. The IRS will probably file a Notice of Federal Tax Lien prior to the bankruptcy and possibly get assets such as equity in your home, or car.

Prior to filing for bankruptcy, try some other avenues that are offered by the IRS. One of those ways is called Offer In Compromise. This is where the IRS will usually waive most of the interest and penalties so that you can hopefully pay the back taxes. There can also be a "installment plan" set up. The IRS will, in most cases, be willing to accept your amount due in installments. The most important thing is to make an agreement you can live with and stick to it.

Filing bankruptcy may not be the best thing for you because if you have substantial assets, this may cause a big loss for you. If you do file, you will find that Chapter 13 is the most frequent bankruptcy used by people with tax problems. This particular plan does allow a payment plan. Speak with your tax attorney for the best advise on how to get you some tax debt relief.

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