What Will Bankruptcy Do To IRS Tax Debt?
A San Jose bankruptcy attorney answers: What Will Bankruptcy Do To IRS Tax Debt?
It was once believed that taxes owed to governmental agencies could not be discharged in bankruptcy and the debtor was doomed to give a huge portion of their monthly income to repay taxes owed to the government. But this may not be true. Taxes, in certain circumstances, may be dischargeable. There are several strict caveats that apply to the discharge of tax debt, the relevant of which are the age of the taxes based upon the date the returns were due, the date of the assessment of the taxes, the date of dates the returns were filed, and whether the debtor willfully attempted to evade payment of the taxes via fraud.
The very minimum requirements for discharging federal or state income taxes are: (1) it must have been more than three [3] years since the returns were due to be filed, (2) the returns were timely filed or it has been two years since the returns were filed, (3) there was no fraud involved in the non-payment of the taxes, and (4) the taxes were not assessed within the last 240 days.
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