Tax bankruptcy attorneys can you help you resolve any tax debt you may owe to the IRS or State of Colorado. Few many realize that tax debt can be discharged in a bankruptcy. That’s right, you can eliminate your taxes by filing bankruptcy. Even the IRS publishes a Bankruptcy Tax Guide. However, only tax bankruptcy attorneys understand the information. This blog will help you decide if bankruptcy is an option to eliminate your tax debt.
How to Eliminate Tax Debt in a Bankruptcy
Many people don’t realize that bankruptcy is an effective way to eliminate tax debt.
In order to get rid of your tax debt, you have to satisfy three requirements. The first is the tax debt is older than three years old. While this sounds simple, it’s not because it depends on the due date. For example, if you think of taxes being older than three years, then you assume you can eliminate taxes from 2018 and earlier. But that’s not correct. Right now as this blog is being posted you can discharge taxes from 2017 and earlier. The taxes from 2018 won’t be eligible until after April 16, 2022. But there are some twists to that date. If you filed an extension, then 2018 taxes are not eligible until after October 16, 2022.
The second requirement is the tax return needed to be filed more than two years ago. Seems simple unless you haven’t filed the tax return. In that case, you have to file the tax return and wait two years even if the taxes satisfy the first rule noted above. But if the IRS filed a return on your behalf, then bad news. You can never discharge those taxes because YOU didn’t file the return more than two years ago. The IRS did, and as a result, you’re out of luck.
The third requirement is there has been no assessment within the last 240 days. An assessment is a term of art used by the IRS to calculate penalties and interest. You can only determine this date by obtaining a tax transcript.
Contact a Debt Relief Attorney for Help
The three rules seem simple, but in application, they are not. There is a notion called “tolling” where these periods can be extended if you sought an offer in compromise. The reality is that consulting with an experienced Broomfield bankruptcy attorney, such as Rob Fuicelli, you can determine whether you can eliminate tax debt by filing bankruptcy. If you cannot, then Rob can help you find another solution like paying the taxes without penalties an interest in a chapter 13 or submitting an offer in compromise.
The reality is you have options. To determine your best course of action, schedule a free consultation with Colorado Debt Help.
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