Tax Issues & Bankruptcy

Our Bankruptcy Lawyers in Phoenix, AZ Can Help You

Do you owe a substantial amount of money to the Internal Revenue Service (IRS) because of failing to pay taxes? If so, you will want to take immediate action to obtain the guidance of a Phoenix bankruptcy lawyer from our firm. Since 2000, we have helped individuals pursue the best possible resolutions to their issues involving tax debts. If you fail to pay taxes or you owe money to the IRS, serious consequences can result, including the potential for incurring a criminal record.

Take action and discuss your case during a free case evaluation with us!

How Filing for Bankruptcy May Be the Answer

Income tax debts may be eligible for discharge by filing for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy may provide a full discharge of many debts by liquidating an individual's assets. Chapter 13 bankruptcy discharges debts by forming a repayment plan to pay the debts over time. Whether you choose to file under Chapter 7 or Chapter 13, there are certain tax debts that can be discharged, and there are other tax debts that cannot be discharged.

In order for tax debts to be discharged, they must meet certain criteria:

  • The due date for filing a tax return is at least 3 years prior
  • The tax return was filed at least 2 years prior
  • The tax assessment is at least 240 days old
  • The tax return was not of a fraudulent nature
  • The taxpayer is not guilty of tax evasion

Some Tax Debts Cannot Be Discharged

While bankruptcy may allow you to discharge several tax-related debts, especially those relating to income tax, there are some tax debts that cannot be discharged. These non-dischargeable tax debts are usually unrelated to income tax, such as tax liens, property taxes, and employment taxes. Tax debts that cannot be discharged may be negotiated in a payment plan with the IRS.

Other tax debts that cannot be discharged with Chapter 7 bankruptcy include:

  • Non-punitive tax penalties
  • Erroneous tax refunds
  • Debts from unfiled tax returns
  • Trust fund taxes

In addition, each chapter of bankruptcy handles tax debts differently. While Chapter 7 bankruptcy can discharge tax debts completely, Chapter 13 requires you to eventually pay the debts back. As an individual facing bankruptcy, it may feel difficult and overwhelming to determine how to handle your tax debts and bankruptcy options. Speak with an experienced bankruptcy attorney in Phoenix about the most efficient course of action to take in your unique situation.

Set Up Your Free Initial Consultation Today

If you are able to prove that all of the specific eligibility rules are met, bankruptcy may be a positive option for you. If you are unsure about whether to file for bankruptcy or pursue an alternative form of debt relief, do not hesitate to request a free case evaluation with our firm. Before you file, Leonard V. Sominsky, ESQ., PC can adequately prepare you for the route ahead.

Call Leonard V. Sominsky, ESQ., PC at 602-635-9102 as soon as you can!

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