Forgiveness of Tax Debt In Bankruptcy

Forgiveness of Tax Debt In Bankruptcy
by: Jonathan Goldsmith Cohen
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Did you know that back taxes can be forgiven in a bankruptcy filing? It is absolutely terrific when you can qualify for forgiveness of IRS debt.

We do the analysis to determine whether or not your taxes can be discharged in bankruptcy. If they can be discharged, taxes are completely forgiven in a Chapter 7 Bankruptcy or paid back in part based on your income and assets in a Chapter 13 Bankruptcy.

Keep in mind that only “unsecured” tax debts can be discharged. In order for a tax lien to be considered “secured”, there must be a federal tax lien properly filed and there must be equity to which the lien attaches.

Here are some of the hoops that we need to get you through to determine if your unsecured income tax debt can be discharged in a Chapter 7 or Chapter 13 Bankruptcy. As of the date the bankruptcy is filed, the following must be determined:

  1. An actual tax return was filed. A Substitute for Return (SFR) is not considered a “return” for bankruptcy purposes.
  1. The return was filed more than two years before the bankruptcy petition was filed.
  1. The return was “due” to be filed more than three years prior to the bankruptcy petition date.
  1. If there was a later audit assessment, the date of the assessment preceded the petition date by more than 240 days; and there was no “fraud” or “willful evasion” involved.

We look forward to working with you to determine if and when your back taxes can be forgiven in bankruptcy!