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Tax Debt Basics In Bankruptcy

Tax Debt Basics In Bankruptcy

: Richard West Law Office

tax debtAs tax season approaches, many questions arise as to how they can be handled easily. n ovFor some, the threat of tax debt liability is aerwhelming reality. If you are expecting to owe the IRS, or already have tax debt problems on file, it is important to know how the bankruptcy process can help.

In The Details

First, it is important that you never ignore the IRS or any of their correspondence. Unlike other creditors, owing the IRS money can lead to swift and steep penalties. Instead, contact the IRS to find out more information about your options for repayment on an impending, or old, tax debt. You might be surprised to learn that the IRSĀ  offers taxpayers several ways to settle their tax debt liabilities that are quite affordable.

If you find yourself in the position to be unable to repay your tax debt, have an overall large debt burden that is preventing you from paying many of your debts, or are unable to negotiate with the IRS, filing for bankruptcy could be a good option. The trouble with filing for bankruptcy strictly to manage tax debts is two-fold, (1) there are strict rules for tax debt eligibility for bankruptcy, and (2) you will be required to report all of your debts in bankruptcy, not just tax debts.

The rules for eligibility of tax debts in bankruptcy are that they must be income taxes, not business or property taxes. The taxes also must at least three years, accompanied by a tax return on file. Therefore, upcoming tax debt problems are not likely to meet this requirement. However, consulting with a Dayton bankruptcy lawyer about your taxes and debts can better determine whether your situation can be resolved in bankruptcy.