How Bankruptcy Can Help With Back Taxes

Failure to pay your taxes can get you into serious trouble. Many people do not deliberately allow delinquent tax bills to build up, but they are so burdened by debt that they cannot come up with the money. If you are in this position, bankruptcy might be able to help you eliminate your debts, including back taxes.

Butler & Butler, LLP, is a North Carolina bankruptcy firm with decades of experience in the area of debt relief. Our attorneys can help you manage your taxes and other debts and move past the fear and uncertainty of the debt cycle.

When Can Bankruptcy Eliminate My Delinquent Taxes?

In many circumstances it is possible to discharge a tax debt using Chapter 7 or 13 bankruptcy, which may allow the discharge of federal income tax debt under the following circumstances:

  • The debt is for income taxes only, not for tax fraud
  • You filed a tax return for the taxes at least two years prior to filing for bankruptcy
  • You did not commit tax fraud, or deliberately evade paying taxes
  • The tax bill is at least three years old
  • The IRS assessed the tax debt at least 240 days before you file for bankruptcy

It is important to remember that discharging your taxes this way does not take away any federal tax liens on your property, but can stop existing tax liens from attaching to property you acquire in the future.

Even if your taxes cannot be completely discharged at once, in many cases they can be restricted. It is often possible to set up payment plans through Chapter 13 bankruptcy so the tax debts are satisfied and paid off in three to five years.

Reliable Advice About Bankruptcy And Taxes

For more information about how bankruptcy can help you with your tax bills and other dischargeable debt, please call our Wilmington office at 910-726-3155 to schedule a no-obligation consultation with one of our lawyers. You may also email us using our online intake form.