Knowledge is protection when the IRS is involved. I'm Darrin Mish, a tax attorney in Tampa with 32 years of experience representing taxpayers nationwide. Here's what I want you to understand.<\/p>\n
Here\u2019s a relatively little known fact \u2013 you can completely cancel your tax debts by being declared a bankrupt.\u00a0 Of course, there are certain conditions that you must fulfill.\u00a0 But if you meet the basic criteria, you can wave goodbye to your tax debts.\u00a0 On the other hand, there are several implications about being declared a bankrupt, so be sure you talk to a lawyer to evaluate your debt removal options first before going ahead to apply for either Chapter 7 or Chapter 13 bankruptcy.\u00a0 Bankruptcy is not a convenient way to escape paying your tax dues, it is a provision for those who genuinely cannot afford to pay to be relieved of their tax debts. \u00a0Click here to read or watch more IRS Help resources.<\/a><\/p>\n There are 2 provisions of the Bankruptcy Code under which you can apply for bankruptcy.\u00a0 They are Chapter 7 and Chapter 13.\u00a0 In general, Chapter 7 bankruptcy means that you will have your entire tax debt forgiven.\u00a0 On the other hand, under Chapter 13 you may have some of your debt cancelled and the remainder will be paid off via installment payments<\/a>.\u00a0 Most individuals choose Chapter 7 over Chapter 13, but if you have a lot in the way of assets or your own business, Chapter 13 may be a better answer for your particular situation.\u00a0 There is much to consider when it comes to bankruptcy, taxes and your own personal financial situation, so you need to have a good understanding of all this before deciding whether to go ahead with your bankruptcy application.<\/p>\n There are 5 conditions you must fulfill in order to make a successful application for bankruptcy.\u00a0 Firstly, the debt must be more than 3 years old in that the due date for filing your taxes must be more than 3 years ago.\u00a0 This prevents people from declaring bankruptcy year after year so they don\u2019t have to pay taxes. This time frame also gives both you and the IRS plenty of time to figure out other methods of payment short of declaring bankruptcy.\u00a0\u00a0 Secondly, the tax return itself needs to be filed at least two years ago.\u00a0 Likewise, the third condition states that the assessment for your tax must be at least 240 days ago.\u00a0 These conditions are imposed to allow the IRS to have as much time as possible to collect the taxes from you.\u00a0 Bankruptcy should be a last resort.<\/p>\n