By: Darrell Castle
You can get rid of your tax debt through bankruptcy if it meets 4 criteria
If you’re looking to file for bankruptcy to get rid of your tax debt, we’d love to talk to you. Call (901) 327-2100 today to schedule your FREE consultation. Or you can fill out the contact form to the right to have someone from our office contact YOU.
Can you get rid of your tax debt through bankruptcy?
Hi, I’m Darrell Castle and I’m an attorney licensed to practice law in the state of Tennessee and the answer to that question is yes and no..or maybe. Sometimes would probably be a better answer.
It works something like this:
Yes, you can get rid of your tax debt in bankruptcy if it meets certain criteria. Let’s talk about 4 of those today. This is a complete discharge of those taxes in Chapter 7 where you would never have to pay them.
1. It has to be income tax. Not sales tax or payroll tax or something like that. It has to be income tax.
2. There can’t be any fraud or intentional attempt to evade taxes or anything like that. That renders it non-dischargeable forever.
3. The taxes have to be at least 3 years old. That means this tax year – which is due April 15th – 2011 taxes will be dischargeable. Now it’s 2010, but as of April 15th, 2011 will be dischargeable. So 3 years.
4. You have to file your returns. And you have to file your returns on time. You can’t make any effort to evade taxes or anything like that.
There are complications for each of those 4 things. That’s something your bankruptcy attorney can go over with you. That’s what he does.
Now, taxes can also be included in a Chapter 13 bankruptcy where you actually pay the taxes back over a 3-5 year period and you have a date certain when your taxes will be completely paid. So you can get rid of taxes that way.
One word of caution – don’t let the IRS file a lien on your property. If you’re past-due on your taxes, you really need to get in there and talk to somebody before the IRS files a lien because even if those taxes are dischargeable, you can’t remove that lien until you sell your house. You can’t sell your house before you pay that lien.
So get in and see somebody about those taxes right now.