There are plenty of reasons for a person to find that they need to consider a bankruptcy filing. Generally it is because we find ourselves with a load of debt and without the income to pay that debt off in a reasonable amount of time, if at all.
Whatever the reason for having so much debt, there are often times when unpaid taxes can be part of the problem. While many kinds of debt can be discharged by a bankruptcy filing, owing the government back taxes quite often does not fall into this debt category.
What this means for many is that even if you do a bankruptcy filing, you may in the end still find that you owe those taxes. But as we will see, that isn’t always the case.
Exceptions to the Taxes and Bankruptcy Rule
While it is true that for the vast majority of people considering filing for bankruptcy back taxes may not be discharged, there are exceptions to this. For a Chapter 7 bankruptcy, you could find that you are able to have your back taxes discharged under these conditions:
- The past due taxes must be income tax
- These past due taxes must be from a tax year three years or more before you filed for bankruptcy.
- You have to have filed proper taxes for the two years before you filed for bankruptcy
- At least 240 days before you filed for bankruptcy the IRS must have assessed the taxes that are past due.
- These past due taxes cannot be because of any fraudulent act or while trying to evade paying taxes.
Federal Liens Still Apply
One of the unfortunate side affects of being in debt, particularly to the government, is that you can find a lien has been placed on your home. If you have a federal tax lien on your home because of back taxes that you owe, bankruptcy will not help you. Even if you can fulfill all the requirements listed above, that lien will not be lifted when you file for bankruptcy if the lien has already been recorded.
Get Answers Not Guesses
So for anyone in debt where the majority of the debt is in the form of income tax due to the government, you might want to reconsider filing for bankruptcy as a solution. You may be in for a very unpleasant surprise if you do so. A situation like this is when it pays to talk to an experienced lawyer who can look into a complicated financial situation. Robert Peters knows and understands family law, tax law and bankruptcy law. This means you can take a bankruptcy case to him when back taxes are involved and find out the truth about your situation. Visit our website or set up an appointment to discuss your financial situation today and get the answers. Because no one who is considering a bankruptcy filing should be guessing what to do next.