Addressing Tax Debts in Bankruptcy
Because the bankruptcy system is created and run by the federal government, it should come as no surprise that it is much harder to declare bankruptcy on tax debts than on most other types of debt. However, there are options for dealing with tax debts under the Bankruptcy Code.
At Watson & Linder in Springfield, Illinois, we use the options offered by the bankruptcy system to help clients eliminate, reduce or manage tax debts. To schedule a free initial consultation with one of our experienced bankruptcy attorneys, contact us today.
Eliminating Older Unpaid Income Taxes in Chapter 7
There are many reasons why you may end up owing income tax debts that are more than a few years old. Maybe you were on an IRS payment plan, but were not able to keep up with it. Maybe you were assessed back taxes due to a clerical error or a misunderstanding.
If you cannot afford to pay old tax debts, filing Chapter 7 bankruptcy may allow you to discharge them. In some cases, debts from as recent as two years ago can be eliminated.
The rules governing which types of unpaid taxes can be discharged in bankruptcy are extremely complex and nuanced, so it is important to consult with a lawyer who will carefully explain your options and, if necessary, argue against the IRS on your behalf.
Putting Your Tax Debts on a Manageable Payment Plan
Many types of tax debt — including employment taxes and recent income taxes — cannot be completely discharged in bankruptcy. However, there may still be options for making your tax debts manageable and avoiding harsh enforcement methods such as wage garnishment.
Filing Chapter 13 bankruptcy may allow you to put your tax debts on a three- to five-year repayment plan, and you may not need to pay any penalties or interest.
Our attorneys will carefully examine your specific circumstances in order to make sure we are following the course of action that is most likely to be successful without taking unnecessary risks with your financial status. Contact us to discuss how we can help you deal with tax debt.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
