When you owe money to creditors and have no way of paying it back, the stress can be overwhelming. What’s worse is that some types of creditors have a greater ability to force you to pay than others do. One prime example is the Internal Revenue Service (IRS). Debt that is owed to the IRS is typically not dischargeable—even if you file for bankruptcy. For many people, that is a frightening thought. There are limited circumstances, however, where filing for bankruptcy may be an appropriate alternative solution to paying the tax debt that you owe.
Facts About Bankruptcy Proceedings and Tax Debt
When it comes to understanding tax debt and bankruptcy proceedings, there is a great deal to learn. It is crucial for taxpayers to contact an experienced attorney for guidance when attempting to find a solution to an unpaid tax debt. Are you considering bankruptcy as an alternative solution for clearing tax debt? Review the following important facts:
- Income tax debt is the most common form of tax debt that is potentially dischargeable in a bankruptcy proceeding.
- People seeking to use bankruptcy as a solution to tax debt must ensure that all tax returns are filed and current.
- This includes tax returns that relate to the tax debt that the person is trying to discharge.
- Typically, tax debt that is associated with filed tax returns three years or older has a better chance of being discharged than newer tax debt.
- Further, tax debt that the IRS has been unable to collect on when it comes to these unpaid taxes may stand a better chance of discharge.
In order for bankruptcy to be in the realm of possibility when it comes to finding a solution to a tax debt, certain minimum requirements must be met. This includes ensuring that the type of tax debt owed is one that can be discharged. For example, if you own a small business in Norman and you have failed to pay your payroll taxes, this type of debt cannot be cleared by virtue of a bankruptcy proceeding.
If you are facing an insurmountable tax debt owed to the IRS, it is important to act quickly. We encourage you to fill out our easy online form today for a free consultation.