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Your IRS Officer Tax Debt and Bankruptcy

Monday, July 2, 2012

Numerous tax payers are filing for bankruptcy these days, especially due to the advertisements claiming that a tax payer can discharge their tax debt just for filing for bankruptcy. Though this is true in some cases, it is important to understand that IRS officers are still able to collect on past due taxes unless specific situations apply to your particular tax situation. According to IRS officers, most tax debts cannot be wiped out during the bankruptcy process. Even if you file for Chapter 7, IRS officer’s state that the tax balance due will remain on your account until it is paid. In Chapter 13, you will just have easier payments, but you will still pay IRS officers on your past due tax liability.

When Can a Person Discharge Tax Debts?

A person can discharge their IRS officer tax debts when they file for Chapter 7 bankruptcy, but the following situations must apply to their tax account:

  • The taxes due to IRS officers are income tax and not business or payroll taxes;
  • The taxes due are not from evasion or tax fraud;
  • The taxes IRS officers are collecting on is at least three years old;
  • All of your tax returns are up to date and have been submitted to IRS officers;
  • Or an IRS officer has assessed your tax balance due a minimum of 240 days prior to filing for bankruptcy.

IRS Officers and Federal Tax Liens

If you have a federal tax lien on your home, car or other asset, you need to realize that bankruptcy will not stop IRS officers from keeping that lien in place. Even if a tax balance is discharged through Chapter 7, IRS officers can keep the tax lien in place since bankruptcy does not remove previously placed or recorded tax liens made by IRS officers. Therefore, if the lien is in place prior to filing for bankruptcy, it will not be removed after bankruptcy.

The Chapter 7 bankruptcy will, however, stop any IRS wage garnishments or bank levies created by IRS officers and prevent them from collecting in the future, but the balance associated with your federal tax lien will remain in place until it is paid.

If you still have a tax lien on your property or assets from IRS officers, but you have filed bankruptcy, you still have options. Contact the professionals at Strategic Tax Lawyer today for assistance with your bankruptcy discharge and federal tax liens. STL will negotiate with IRS officers on your behalf and help to reduce your tax balance or attempt to remove the lien so that you can sell and exercise your assets.

Are you suffering because a lien has been filed against you?  Check out the IRS Tax Lien library page to stay informed on what your options are.  These IRS sections on federal tax lien might offer a lot of guidance.  Do a local search on your county and state for applicable laws on tax liens at Google.  Visit the Beverly Hills Bar Association.