Experienced and Knowledgeable Tax Relief Attorney
Serving Tax Payers in Tacoma and Pierce County, Washington
Find Relief from Unmanageable Tax Debts
The struggling economy has made it difficult to afford any major expenses. One way in which a consumer can fall into debt is by failing to pay their taxes on time. In extreme cases, a person may be unable to catch up with their tax debts and may therefore face collections proceedings from the Internal Revenue Service (IRS). This can be a terrifying experience and could escalate to a tax review and possible criminal charges if you do not take action to resolve the issue.
What tax debts can be discharged through bankruptcy?
If the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions.
- The due date for filing a tax return is at least three years ago.
- The tax return was filed at least two years ago.
- The tax assessment is at least 240 days old.
- The tax return was not fraudulent.
- The taxpayer is not guilty of tax evasion.
Note: we apply these criteria to the unpaid tax debts of each tax year. Apply these criteria to each year’s tax debt to find out if that year’s unpaid balance is dischargeable through bankruptcy.
Return Due At Least Three Years Ago
The tax debt must be related to a tax return that was due at least three years before the taxpayer files for bankruptcy. The due date includes any extensions.
Return Filed At Least Two Years Ago
The tax debt must be related to a tax return that was filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date the taxpayer actually filed the return. There are differing opinions within the federal court circuits as to whether a late filed return constitutes a filed return for bankruptcy discharge purposes.
Tax Assessment At Least 240 Days Old
The IRS must assess the tax at least 240 days before the taxpayer files for bankruptcy. The IRS assessment may arise from a self-reported balance due, an IRS final determination in an audit, or an IRS proposed assessment which has become final.
Tax Return was Not Fraudulent
The tax return cannot be fraudulent or frivolous.
Taxpayer Not Guilty of Tax Evasion
The taxpayer cannot be guilty of any intentional act of evading the tax laws.
Some Tax Debts Not Dischargeable
Tax debts that arise from unfiled tax returns are not dischargeable. The IRS routinely assesses tax on unfiled returns. These tax liabilities cannot be discharged unless the taxpayer files a tax return for the year in question. Employer related taxes, such as 941 taxes, employment security, labor and industries, and trust fund taxes are usually not dischargeable.
A Chapter 7 bankruptcy discharge of income taxes wipes out the personal obligation to pay the tax and prevents the taxing authority from going after your bank account or wages. However, tax liens, also known as secured taxes, will remain attached to your property. This rule applies only to tax liens recorded against your property before you file for bankruptcy. This means that although you might not be personally liable for the tax debt, you’ll have to pay the lien from any profits when you sell the property.
Washington Fresh Start can help with your tax debt!
The sooner you speak with a bankruptcy lawyer from Washington Fresh Start, the sooner you can find relief from your overwhelming debts. Bankruptcy attorney David Yando has more than 30 years of experience and can help you make the best decisions for your individual situation. He has a master’s degree in tax law (LL.M.), making him one of the highest-qualified attorneys to counsel you in these matters. Contact us right away to learn what we can do for to eliminate your tax debts.