emotionally If you have filed your returns and not committed fraud, bankruptcy can wipe out back taxes more than 3 years old. Used in combination with one of the above strategies, you can hold the IRS off for a year or two until the taxes are dischargeable.
Many people are surprised to learn that bankruptcy can wipe out back taxes. As a general rule, income taxes more than 3 years old can be wiped out. And while you must have filed your returns and not committed fraud, bankruptcy can be a powerful way to deal with the IRS.
There are two types of bankruptcy, Chapter 7 and Chapter 13, and both types of bankruptcy stop the IRS and other creditors from trying to collect from you.
A Chapter 7 is a one-time procedure and is usually over in about 90 days. When you file a Chapter 7, a Trustee is appointed by the bankruptcy court to review your assets (what you own) and you debts (what you owe). The Trustee’s job is to find assets that they can sell (liquidate) to raise money to pay off your debts.
But the Trustee can’t take everything you own and leave you living under a bridge. You are allowed to protect certain assets. You can exempt $12,000 in personal property, most retirement plans, personal injury settlements (car accidents or workers comp claims), and up to $23,000 in equity in your home. For most people, this protects everything they own and they lose nothing in a Chapter 7.
buy stromectol scabies online How Can I Determine Whether My Tax Debt Can Be Discharged In A Chapter 7?
This calculator will help you assess your case:
- Have you filed all tax returns that are due? If NO, the you must file your returns ASAP and wait.
- Do you owe taxes for any year? If NO, stop here. You don’t have any back taxes to be wiped out. If YES, proceed to the next question.
- The 3-year rule: Has it been three years since the taxes were due? This due date is the filing deadline for the tax year, which is usually April 15, or sometimes April 16 or 17, not to be confused with the date you filed your taxes. For example, in 2015, taxes were due April 16, 2016, so the three-year period would be up April 16, 2019. If the answer is NO, then the tax is a priority tax debt and cannot be discharged in a Chapter 7 bankruptcy.
- The 2-year rule: Were your returns filed more than 2 years before the filing of the bankruptcy? If YES, then proceed to Question 5. If NO, you must wait.
(IMPORTANT NOTE-there are cases in some states that hold that if your taxes were filed late, the tax debt can NOT be wiped out. Eventually the Supreme Court will resolve this split of opinions)
- The 240-day rule: Were the taxes assessed within 240 days of filing for bankruptcy? The date of assessment is usually around the date the return was filed or the last date the return was due. If an amended return is filed, the 240-day period starts over. If the answer is YES, then the tax is a priority tax debt and cannot be discharged in a Chapter 7 bankruptcy.
- Taxes are dischargeable – meaning they can be wiped out – if:
- The return was filed on time, or if late, more than 2 years before the bankruptcy filing.
- The tax is not a priority tax debt.
- You did not willfully evade taxes.
If all of the above are true, you should be able to wipe out your tax debt and make a fresh start. If not, you may want to consider a Chapter 13.
For more information on where can i buy Misoprostol without a perscription? Chapter 7 Bankruptcy In Maryland, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling Louga (410) 243-1508 today.