Can Bankruptcy Resolve Tax Debt Matters?
No one likes thinking about their debt, but there's something about tax debt that makes it even more threatening and overwhelming than other obligations you may have. Mail from the IRS or North Carolina Department of Revenue can cause a knot in your stomach and lead to serious financial consequences down the road. If some or all of your debt comes from back taxes, find out how bankruptcy could help you get some breathing room.
Are Taxes Dischargeable in Bankruptcy?
In some cases, money owed to the IRS or North Carolina Department of Revenue can be discharged through bankruptcy, however, there are some factors that may affect your ability to discharge tax debt. There are also some types of tax debt that cannot be written off. This is why it's important to consult a bankruptcy attorney near you. If you find out immediately that your debt is nondischargeable, you can make an informed decision whether or not bankruptcy is worth it. Payroll taxes, fraud penalties, and non-income taxes cannot be discharged.
The Timing of Your Tax Returns
Timing is perhaps the most crucial factor in figuring out whether or not your tax debt can be discharged through bankruptcy. Assuming that most of your debt comes from income taxes, you must meet bankruptcy standards for discharge. If you committed fraud or tax evasion, that amount cannot be discharged. Similarly, you must have filed a tax return for each year of debt you wish to discharge. If you did not file, the taxes owed for that year cannot typically be discharged in bankruptcy.
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