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Eliminating IRS Debt
Petitioning for bankruptcy is often your smartest option for moving forward financially when you find yourself facing crushing tax debt. Thankfully, bankruptcy allows you to rid yourself of penalties, interest, and of course old tax debt. You can learn more about your eligibility and IRS tax forgiveness options from a trustworthy bankruptcy attorney.
You must meet multiple specific requirements to rid yourself of tax debt, which includes the 3/2/240 rules. Following these rules, you can file for bankruptcy only if:
- The taxes are on returns where the due date of the return, counting extensions, is within 3 years of the bankruptcy filing date. (3)
- The taxes are on returns filed more than 2 years of the filing date. (2)
- The taxes are assessed within 240 days of the filing date. (240)
Your tax debt must satisfy each of these requirements in order to consider filing for bankruptcy.
Chapter 13 is often used when filing bankruptcy due to taxes. To pursue this method of bankruptcy, you must satisfy the requirements of:
- Having filed all of your tax returns over the past 4 years prior to your meeting of creditors.
- Continuing to file all of your required federal returns. You may need to obtain an extension to file on time.
- Continuing to pay any of your taxes that may arise and require payment during your bankruptcy process.
Sometimes, filing for Chapter 7 bankruptcy is the most sensible solution. This method grants you automatic stay, which stops creditors from attempting to collect from you. You can discharge your debt about 90 days after you open your case. And the IRS will not seek you out for collection until you have already discharged the debt. You can then begin planning to repay any debt that was not discharged and you’re still carrying.
In some situations where you’re facing down tax debt, you can use an Offer in Compromise. This is an agreement between you and the IRS that will allow settling your tax liabilities for less than your full amount owed. Taxpayers must draft a proposal to begin this process.
When seeking an Offer in Compromise, or OIC, your income will be considered primarily as a deciding factor. Your income determines how long it will likely take for you to fully repay your debt. Your financial needs and obligations will also be considered to ensure fair measures are taken. All of your overall equity and other assets will finally be considered when determining your OIC status. This will include the assets and property you own or have invested in. Each of these will be considered together to help the IRS make a decision towards accepting or rejecting your proposed OIC. An accepted Offer in Compromise will set provide you with an expedited path back towards financial security.
Contact our office to discuss your options for eliminating your tax debt today. You can reach us at (972) 812-0900.
Let Our Experience Be Your Guide.