If you are in distress because of income tax debts, then there is good news for you. You may get your tax debts discharged under Chapter 7 and Chapter 13 of the Bankruptcy Code. In fact, don’t think that bankruptcy is the only option you have got. There are 4 other ways you can take up to get yourself out of income tax debts. Here only the method of bankruptcy is discussed.
How can you discharge your debts?
There are certain requirements you should meet if you want to discharge your tax through bankruptcy. Chapter 7 bankruptcy allows you to fully discharge your debts. However, under Chapter 13 you will be provided with a payment plan that will help you to repay some debts while the rest of your debts will be discharged. The new bankruptcy laws treat tax debts in the same way under both Chapter 7 and Chapter 13 petitions. The five criteria that you have to meet to qualify for your tax debts to be discharged are as follows.
- Return due date is at least 3 years ago – The tax debt that you want to discharge must be related to a tax return that had a due date of at least 3 years back from the date you file for a bankruptcy. Any extension is included in the due date.
- The return must be filed at least 2 years ago – Your tax debt should be related to a return that was filed at least 2 years before you file for the bankruptcy. The accurate date is measured from the day you actually filed the return.
- Tax return is not fraudulent – Your tax return cannot be fraudulent or frivolous for you to qualify for tax debt discharge under bankruptcy.
- Tax assessment should be at least 240 days old – Before you file for bankruptcy; the IRS must assess your tax to be at least 240 days old. Usually the assessment of the IRS rises from a self-reported balance due which can be either the final IRS determination in an audit or a proposed assessment by the IRS which has become final.
- Taxpayer should not be guilty of tax evasion – You cannot be guilty of evading tax laws intentionally.
If you meet the above laws, you can qualify for bankruptcy.
1 comments:
I only recently started my blog, so it will be handling more and more material soon enough.
And I agree, during times of crisis, structural issues of an economy become more visible than ever. All the eurozone peripheral economies are a clear confirmation on this, as they need a serious restructuring of their labour market and a tax reform, rather than short-term quick-fix policies that will eventually do more harm than good. tax debts
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