Discharging Tax Debts In Bankruptcy Is Easier Than You Might Expect
One of the best things about filing for bankruptcy is that you get to tell your creditors to get lost. Medical bills, credit card debts, and unsecured personal loans that have been making you miserable for years disappear a few months after you file for chapter 7 bankruptcy or a few years after a chapter 13 bankruptcy filing. On the other hand, Uncle Sam is a creditor that is very hard to get rid of, even after you file for bankruptcy protection. A bankruptcy filing does not enable you to discharge debts that a civil or criminal court has ordered you to pay. Therefore, if you owed alimony, child support, civil or criminal fines, restitution, or judgments or damages awards resulting from a court ruling against you in a lawsuit before you filed for bankruptcy, these debts will remain even after your bankruptcy case is complete. Likewise, you cannot discharge federal student loans in bankruptcy. Therefore, it might surprise you that some tax debts are eligible for discharge in bankruptcy. If you are considering filing for bankruptcy protection and overdue tax obligations are part of the reason that you are in over your head with debt, contact a Jupiter chapter 7 bankruptcy lawyer.
A Magnanimous Side of the IRS That You Have Never Seen Before
In some bankruptcy cases, filers can discharge some of the tax debts that they owe to the IRS from previous years. This debt forgiveness does not apply to all overdue tax obligations, though. The IRS will only discharge tax debts that are more than three years old. This means that, even if your bankruptcy case is successful, you will still owe the IRS all your tax obligations from the past three years. Furthermore, the IRS will not consider forgiving any of your tax debts if you have any missing income tax returns, and it will not be in the mood to be generous with you if you filed your tax returns late.
Filing for bankruptcy is not the only option if debts owed to the IRS are a major source of financial stress. You can settle your tax debts directly with the IRS for less than the original amount owed. The Fresh Start Program has expanded the eligibility for offers in compromise. In order for an offer in compromise to be accepted, you must have filed tax returns for every year related to the offer in compromise. The lesson to take away from all of this is that, no matter how unpleasant it is to file income tax returns, whether it is a matter of dreading math or not wanting to think about how bad your financial situation really is, it is the first step to getting out of debt, with or without a bankruptcy filing.
Contact a South Florida Debt Lawyer About Unpayable Tax Debts
A South Florida debt lawyer can help you if taxes are sending you deeper into debt and your debts are rendering you unable to pay your taxes. Contact Nowack & Olson, PLLC in Boca Raton, Florida to discuss your case.
Sources:
irs.gov/pub/irs-utl/oc_theirsfreshstartprogramcanhelpyoupayyourtaxesfinal.pdf
irs.gov/payments/offer-in-compromise
