The Truth About Tax Debt

: Chris Lee Law Firm

  Filed under: Tax Debt

tax debtTax debt is no easy matter. In fact, most people dealing with unpaid taxes often avoid the IRS because they feel they have little recourse. While some tax debts are not eligible for discharge in bankruptcy, there are still options available for resolving these debts.

Facts About Tax Debt

First, some tax debts are eligible for bankruptcy. Income tax debts may be eligible for bankruptcy protection if they meet some guidelines that are laid about by bankruptcy laws. Income tax debts must be at least three years old and have current tax returns on file with the IRS. If you know you owe taxes, but did not file a tax return for those years, your debts may not be eligible. The debts must also have been assessed by the IRS at least 240 days prior to filing for bankruptcy. Debts must be for taxes legally accumulated and not involve any means of fraud or tax evasion.

If bankruptcy isn’t an option, or you choose to deal with your debts in other ways you still have a few options for managing your debts directly with the IRS.  Many people don’t realize that the IRS actually offers several programs for resolving unpaid taxes. An installment plan offers you the chance to repay your debts over a series of smaller payments, usually lasting up to two years. If you cannot afford to repay your debts you may be able to secure a debt settlement with the IRS, known as an Offer In Compromise. Either of these programs can be negotiated directly with the IRS without the hassle of a bankruptcy court or third party debt relief company.

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