29 Jan Use Bankruptcy To Solve Tax Problems
Many kinds of taxes are dischargeable in bankruptcy. You know that saying “there’s nothing sure in this life but death and taxes”? You might think that it applies to bankruptcy as well. The bankruptcy code is full of sections giving preferential treatment to the tax collector.
And there are many different kinds of taxes. Let’s look at the most common kind of tax – income taxes.
In short, you must file your tax returns even if you owe taxes as a result. To paraphrase, it is better to have filed and owe than to not file at all.
Why? Because if you do file your returns and the IRS doesn’t succeed in collecting those taxes in three years, you might be able to discharge them.
Even if the taxes are not dischargeable, you might be able to use the bankruptcy process to negotiate a payment in full satisfaction, or if you are in Chapter 13, to set up a meaningful payment plan. Bankruptcy also can in certain instances, forestall enforcement efforts of the tax collector.