We frequently represent clients who owe significant sums of back taxes, to the IRS. Often, the question of bankruptcy is raised, and when it might be appropriate for use in resolving the federal tax issue with the IRS. We have seen a significant number of our clients resolve their outstanding IRS tax debts either completely, or reduce it significantly, through a Chapter 7 bankruptcy filing.
In order for a tax to be dischargeable in bankruptcy, it must meet the following requirements:
- The tax must be at least 3 years old;
- The IRS cannot have filed a Substitute for Return (an IRC Section 6020(b) assessment)
- The tax return must have been filed for at least 2 years;
- Any additional tax assessments (ie. amended tax returns or IRS audit assessments) must be at least 240 days old;
- The tax return can not have been fraudulent (tax fraud is never dischargeable); and
- It cannot be a trust tax, such as payroll taxes, which are never dischargeable
In addition to the above, there may be issues with Notices of Federal Tax Liens that we can help our clients sort out and make the decision whether to file bankruptcy to resolve their federal or Connecticut tax debt or not.
If you have any questions regarding bankruptcy to resolve federal tax debt or state tax debt in Stamford, Connecticut or elsewhere do not hesitate to contact me at (860) 657-9040 or by email at egreen@convicerpercy.com.
Eric L. Green, LL.M.
Convicer, Percy & Green LLP
60 Long Ridge Road, Suite 202
Stamford, Connecticut 06902
Ph. (203) 602-5550
Fax (203) 286-1311
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