Many people believe the common myth that bankruptcy cannot help with tax debt. It is true that the bankruptcy discharge, which is a court order wiping out the debtor's liability on many types of debt, does not often apply to income tax debt. However, some tax debt can be discharged, and certain types of bankruptcy can help with even nondischargeable tax debts. Taxpayers seeking tax relief in Dallas TX can contact attorney William Kunofsky to learn more about the following ways bankruptcy may help with tax debt.
Tax Relief in Dallas TX - 4 Ways Bankruptcy Can Help with Taxes
Stop Collections with the Automatic Stay.
When a taxpayer files bankruptcy, none of his creditors can try to collect on their debts, not even the IRS. The automatic stay goes into effect, forcing all collection activity to grind to a halt. IRS cannot levy on property, file any tax liens, or even call or send letters. The automatic stay gives the taxpayer breathing room to figure out a plan of attack.
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Whether a consumer files a Chapter 7, a Chapter 13 or a Chapter 11, certain tax debts can be wiped out completely as long as they meet certain requirements: 1) they became due more than 3 years ago; 2) the returns were filed at least 2 years ago; and 3) the taxes were assessed at least 240 days ago. If the taxes fail to meet one of these criteria, the penalties and interest may still be dischargeable depending on the circumstances. An attorney experienced in both tax and bankruptcy can help a taxpayer figure out if her tax liability can be eliminated in bankruptcy through the bankruptcy discharge.
Pay Off Nondischargeable Tax Debts in Chapter 11 or Chapter