Discharging Taxes through Bankruptcy

By
Services for Real Estate Pros with Backoffice Squared

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS and Florida Department of Revenue. One option to consider when trying to figure out a plan to get the IRS out of your life is to file bankruptcy. Bankruptcy is a complicated subject that requires an attorney who specializes in that area of the law. This is not a DIY project and this post is only meant to inform you about the general rules regarding which taxes might be dischargeable.

Some taxes, interest, and penalties might be dischargeable if all the following apply:

  •          The tax return was due (including extensions) more than 3 years ago,
  •          If the return was filed late, it must have been on file with the IRS for at least 2 years,
  •          Any additional assessments from an audit or amended return must be at least 240 days old,
  •          The taxpayer did not commit fraud or attempt to evade a tax, and
  •          It cannot be “Trust Funds”

Paying a non-dischargeable tax with a credit card makes that credit card liability to be non-dischargeable. This eliminates any plans to convert non-dischargeable taxes into dischargeable ones simply by whipping out your Master Card.

Penalties that are designed to be a punishment, such as the failure-to-file and failure-to-pay, are dischargeable. Penalties design to be a method for collecting taxes, such as the 100% penalty, are not dischargeable.

Interest is dischargeable if the underlying tax is dischargeable.

If you think you have significant taxes that might be dischargeable, then plan of having a bankruptcy attorney as part of your team.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

 

Jim Payne, CPA

Backoffice2

Gainesville, FL

Cell (352) 317-5692

Office (352) 376-9401

Fax (352) 376-9440

jim@backoffice2.net

https://backoffice2.net

 

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Rainer
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Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
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Great informaton, thanks for sharing!

Penalties that are designed to be a punishment, such as the failure-to-file and failure-to-pay, are dischargeable. Penalties design to be a method for collecting taxes, such as the 100% penalty, are not dischargeable.

Interest is dischargeable if the underlying tax is dischargeable.

Oct 30, 2019 04:21 AM #1
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Rainmaker
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Jim Payne, CPA

CPA firm practicing in the area of IRS Collections
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