Bankruptcy
Bankcuptcy may remove your IRS Debt, but there are limitations.
“The whole process from start to finish was seamless. Glen was a pleasure to work with; efficient, kind and helpful! We will be using EAS Income Tax Services for all of our tax needs in the future!”
Paul H.
Remove IRS Debt – Under Certain Conditions
Eliminating IRS debt through bankruptcy is possible under certain conditions.
Types of Bankruptcy:
Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, it can discharge certain unsecured debts, including qualifying IRS tax debts.
Chapter 13 Bankruptcy: This involves a repayment plan, allowing you to pay off your tax debt over three to five years.
Eligibility Criteria:
Income Tax Debt: Only income tax debt can be discharged. Other types of taxes, like payroll taxes, are not eligible.
Age of the Debt: The tax debt must be at least three years old.
Filing Requirements: You must have filed a valid tax return for the debt at least two years before filing for bankruptcy.
Assessment Period: The IRS must have assessed the tax debt at least 240 days before you file for bankruptcy.
Automatic Stay:
When you file for bankruptcy, an automatic stay goes into effect, stopping all collection activities by the IRS, including wage garnishments and bank levies.
Discharge Process:
If your tax debt meets the criteria, it can be discharged in Chapter 7, meaning you are no longer legally required to pay it.
In Chapter 13, you may be able to reduce the amount you owe and pay it off through a structured repayment plan.
Exceptions:
Tax debts resulting from fraud or willful evasion are not dischargeable.
Filing for bankruptcy can be a complex process, especially when dealing with tax debts.