As the tax due date approaches, you may be too strapped for cash to cover your taxes. But don't worry - filing bankruptcy can help eliminate certain types of tax debt and give you a fresh start! However, it's important that you hire an experienced attorney who understands the intricacies of filing for and discharging this type of debt. With the right counsel by your side, you could soon have peace of mind when it comes to managing your taxes and bankruptcy!
Which Types of Tax Debt Can I Discharge?
By filing for Chapter 7, 11, or 13 bankruptcy, you can gain debt relief from federal and local taxes as well as any interest and penalties that have accrued.
To qualify for bankruptcy discharge of tax debt, three conditions must be satisfied:
- The taxes must have been incurred more than 36 months before filing for bankruptcy
- You had to submit a return no less than two years prior to seeking relief through bankruptcy
- Additionally, you are required to make any payment due at least 240 days before initiating the proceedings
Chapter 7 bankruptcy proceedings won't forgive debt accrued due to fraud or willful evasion/neglect of tax laws, nor any taxes owed on income earned within the previous three years. Without these conditions met, those debts remain ineligible for discharge.
Are There Any Tax Debts That Bankruptcy Can’t Resolve?
It's essential to remember that some taxes are not absolved through bankruptcy at all. Among such priority debts include payroll and trust fund payments, which must be paid even if your bankruptcy has been approved.
Considering how the resolution of tax debt may affect you? Then it is vital to speak with a knowledgeable attorney who specializes in bankruptcies. They can aid in comprehending what options exist for you as well as determining the most effective way forward when dealing with your tax debt issue.
Contact an experienced bankruptcy lawyer from Buchalter & Pelphrey Attorneys At Law to learn more about your legal options.