Bankruptcy and Taxes But you thought that IRS Taxes weren’t dischargeable in Bankruptcy?

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You might think that filing for bankruptcy will end your IRS Problems. If you are considering bankruptcy you need to research it carefully to make sure it is the right decision for you and your family. You need to be aware that bankruptcy can have a long-term effect on your family Before deciding to use bankruptcy to solve your IRS problems, you need to research it thoroughly and obtain wise counsel. Since there are two basic types of bankruptcy, Chapter 7 and Chapters 11, 12 and 13, you will need to make a decision regarding which bankruptcy to file. Chapter 7 is straight bankruptcy. This type allows you to liquidate your debts, both non-exempt and dischargeable. Most of your tax debt is eliminated provided it is over 3 years old. This does not affect recent taxes. Chapters 11, 12 and 13 are repayment plans that allow you to repay some of your debt and eliminate the rest. Each plan has its own specific deadline.At the end of the deadline, you will have paid your tax bill in full. Your tax debt can be discharged if you meet these five criteria: You must file for bankruptcy at least 3 years after the tax return was due  You have filed tax returns for at least 2 years prior to filing  Your tax return was not fraudulent  Your tax assessment is at least 240 days prior to filing You have not been guilty of tax evasion Other important factors to note are that you must have filed your taxes for the prior 4 years before your bankruptcy case can go before the creditors meeting In addition, tax debts that are not eligible for discharge are withholding taxes and any taxes owed because of unfiled tax returns. Disadvantages of Bankruptcy Even if you file for bankruptcy, you can still owe taxes when your term is up. Whatever time remains on the statute of limitations on your current tax bills is extended. This will give the IRS more time to collect these taxes from you. The effect on your credit rating is another point to consider. Bankruptcy becomes part of the public record and can remain on your credit report for up to 10 years. This could make it harder for you to qualify for credit, obtain loans, enter into a new rental agreement, and could even affect your ability to obtain a new job. Getting rid of your IRS Problems through bankruptcy may be a good choice for you. It is important to know that the bankruptcy rules and regulations can change quickly. You will need the help of a professional to get the most up to date information. It is an important decision for you and your family. You would be wise to review your situation with an experienced tax professional especially with the complexity of the bankruptcy process and its continual changes. We can answer your questions regarding bankruptcy or any other IRS Problems. Looking for a Tax Attorney? We can represent taxpayers anywhere in the United States. Contact our office today.  Click here to read or watch more IRS Help resources.

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