IRS Taxes and Bankruptcy Protection

There are a few misconceptions about the interplay of IRS Taxes and Bankruptcy.

A. IRS Taxes are dischargeable in bankruptcy if a 3-Part Test can be satisfied:

1. If the taxes owed are for a taxable year more than 3 years from the date of filing bankruptcy; and
2. The tax return has actually been filed for at least 2 years prior to filing bankruptcy; and
3. The IRS has assessed the taxes at least 240 days prior to filing bankruptcy.
4. If all 3 prongs of the test are satisfied, the tax debt can be discharged in bankruptcy.

If all 3 prongs of the test are not satisfied, you can still file a Chapter 13 Plan to provide for payment of the tax obligation spread out over 3 years.

Bankruptcy protection is a useful legal right that people can use to get their lives back on track. For more information call (253) 815-6940