Many debtors filing for bankruptcy do not think they are exempt from income tax on bankruptcy. However, it is not. Can be exempt from income tax in bankruptcy Of course, paying off tax debts isn’t easy. Tax exemptions depend on a number of factors. And many debtors are not eligible for forgiveness of their tax debts.
To understand the complexities of determining whether your tax debt is forgiven or not. Consider that there are three Why Income Tax Important forms of debt – Guaranteed (eg your mortgage), Unsecured (eg your credit card bill), and Priority (eg child support and alimony). Can be grouped into all three – even sometimes in the case of the same debtor.
Secured tax debt is a debt that the IRS lays on the debtor. Obligations against all assets of the debtor as collateral. Preferred tax debt is the debt that the debtor is unable to pay in bankruptcy. but no obligation Unsecured tax debt is debt that the debtor should be able to pay.
So what determines whether income tax debt is eligible for discharge? There are six rules for collecting income taxes. This applies equally to state and federal income taxes. The tax can be exempted if all of the following conditions are met:
* Latest deadline for filing tax returns is more than three years (Note: The three-year period starts from the date your most recent tax return is due for the tax year. Extending your tax return filing will delay the start. So don’t just assume you know the due date, your 2006 tax return should be by 2007 by April 15, if you’re filing an extension. Should be due by October 17, 2007 (depending on the weekend).
* The taxpayer has filed or prepared a tax return for the tax year at least 2 years prior to the bankruptcy filing date.
* If a tax claim has been assessed, at least 240 days have passed since the date of the last assessment and bankruptcy filing.
*Taxes can be assessed Which means that the debtor is not the person who does not file taxes.
* The tax return is not a fraud.
* Debtors do not intentionally evade taxes
Therefore, debtors should keep these conditions in mind before filing for bankruptcy. For example, if the debtor waits 35 days to file. He/she may be able to forgive their taxes. Therefore, it is advisable if the debtor believes that he or she is exempt from taxes. Should order tax accounting records from the Revenue Department to verify the filing date, due date, and assessment date.
It should also be noted that this blog is a basic description of the rules related to income tax exemptions. And many complex problems must arise in the case of debtors. Some of the problems debtors may need to address include but are not limited to:
* Does the offer of compromise affect the time period?
* Which assets are covered by IRS obligations?
* Will the Revenue Department release the tax burden by itself or not?
* How does the IRS withhold tax returns when the debtor is bankrupt and has unforgivable taxes?
Peter Bricks is a practicing bankruptcy attorney at The Bricks LLP in Atlanta, Georgia. He is licensed in Georgia and the District of Columbia. Bricks Law Firm is a debt relief agency proud to assist consumers. in filing bankruptcy, however, if there is no fee agreement There will be no attorney/client relationship with the reader of this article. Your situation is unique to you and Peter Bricks and/or The Bricks LLP must consult with you individually. We will therefore be able to provide you with accurate and effective legal advice. This article should be used for educational purposes only.
