Tax Debt and Bankruptcy

: Chris Lee Law Firm

  Filed under: Taxes

Tax

If you owe money to the Internal Revenue Service, they will not let you avoid it or forget it. The IRS has almost unlimited power in recovering tax debt, making them a very aggressive collection agency. The IRS can levy your bank accounts, put liens on your property, or garnish your wages without having to go to court and sue you to obtain a judgment.

Eliminate Tax Debt

If your tax debt meets certain specifications, you may be able to eliminate your tax burden. If the criteria are not met, your tax debt will still be owed even at the conclusion of your bankruptcy case. To qualify to eliminate your old tax debt:

  • your tax debt is at least three years old
  • you didn’t commit tax fraud or evasion
  • your tax debt must have been assessed within 240 days before filing bankruptcy
  • you filed a tax return more than two years ago

If you have a tax lien on your home, the lien will not go away when filing bankruptcy. While your tax debt might be eliminated, the lien will remain on your property, preventing you from selling the house without paying the tax lien.

Some tax debt will never be eligible for discharge. These include:

  • tax penalties
  • trust fund taxes
  • payroll withholding taxes
  • tax debt from unfiled returns

Sometimes contacting the IRS can be helpful. You may be able to set up a payment plan or an offer in compromise if you do not meet the criteria above to have it eliminated.

For more information about your tax debt and bankruptcy, contact a Fort Worth bankruptcy attorney today.


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