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:
- If the taxes owed are for a taxable year more than 3 years from the date of filing bankruptcy; and
- The tax return has actually been filed for at least 2 years prior to filing bankruptcy; and
- The IRS has assessed the taxes at least 240 days prior to filing bankruptcy.
- 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