Can Bankruptcy help with Tax Liability?

Many people become stressed at the very thought of taxes since they may not be able to afford to pay their tax bills. For this reason, some individuals choose to ignore their taxes and may face years of overwhelming tax liability. Unpaid taxes may constantly loom in the back of your mind, along with the fear that the Internal Revenue Service (IRS)¹ will come after you. If you have unpaid tax liability, you should know that there are solutions and that the experienced attorneys at the Law Office of Ronald D. Weiss, P.C. in Long Island, New York can help you.
Are taxes dischargeable in Chapter 7 bankruptcy?
Many different types of debt may be discharged by filing for bankruptcy under Chapter 7² of the United States Bankruptcy Code. Federal tax liability may or may not be discharged, depending on your individual situation. You must meet numerous requirements under the law in order to eliminate your tax debt in bankruptcy, including the following:

• The tax returns that resulted in the tax liability had a due date three or more years prior to the date on which you filed your bankruptcy petition.
• You properly filed the relevant tax returns with the IRS two or more years prior to filing your bankruptcy petition.
• The relevant tax returns had no fraudulent information and involved no attempt on your part to intentionally limit your tax liability or evade payment of legitimate taxes. For example, you did not try to overstate expenses or deductions, conceal income, or use false identifying information.
• The IRS assessed your tax returns and liability 240 days or more prior to the filing for bankruptcy.

If you meet these requirements, you may likely be able to discharge your tax liability in Chapter 7 bankruptcy. Unfortunately, if the IRS has already placed a tax lien on your property, that lien cannot be removed through the bankruptcy process.
If your tax debt is not dischargeable, an attorney can help you with other arrangements to manage the debts, such as payments plans, offers in compromise, innocent spouse relief, and more. If you have unpaid debts, call our office at 631-271-3737 for assistance today.
¹ http://www.irs.gov/
² http://codes.lp.findlaw.com/uscode/11/7