Filing Chapter 7 Bankruptcy on IRS Income Taxes
If you’ve thought about wiping out your tax debt, then, you will want to read this:
Filing Chapter 7 bankruptcy on IRS income tax is absolutely legal, viable, and available to you. Just remember the 3/2 rule: If you have filed an income tax return over 2 years ago and the it is for a tax year over 3 years ago, then, you can file a Chapter 7 bankruptcy and liquidate the tax debt. However, you will want to make sure that the last date of assessment also meets these requirements. So, what does all of these really mean?
Example 1: Mr. Tim Horton
Tim owes $80,000.00 in IRS income tax debt from the years 2011, 2012, and 2013. If today is January 1, 2018, then, he can file for bankruptcy and liquidate all of the debt.
Example 2: Duncan Donits
Duncan owes $80,000.00 in IRS income tax debt from the years 2011, 2012, and 2013. However, he did not file any of these tax returns until just yesterday. If today is January 1, 2018, he needs to wait 3 years to file Chapter 7 bankruptcy.
Example 3: Brian Starbukz
Brian owes $80,000.00 in IRS income tax debt from 2011, 2012, and 2013. However, he went under audit in 2017, and it turns out that his 2013 income tax return resulted in an additional $40,000.00 worth of tax debt. Since his last date of assessment is still inside of the 3 year look-back period, his 2013 tax debt does not qualify for Chapter 7 bankruptcy relief.
Filing bankruptcy comes with many additional layers of complexity. First off, all of your debt comes into play. Even your Macy’s credit card will be closed out. All of your utility companies will also require a deposit of hundreds of dollars prior to continuing with service. This is no easy task for the debtor. Consider other options such as an Offer-In-Compromise and understand the positive and negative before moving ahead.
Filing Chapter 7 Bankruptcy on IRS Income Taxes
