Are Federal Owed Taxes Dischargeable in Your Bankruptcy?

How to Get Rid of Back Federal Taxes in Bankruptcy?
We have been asked this question many times. As a matter of fact, Congress has already provided this important tool in the Bankruptcy Code but the important thing is that one should carefully use it without any collateral impact on the bankruptcy case. Let us visit them one more time. In order for those taxes to be discharged, the following conditions must be met.

1. First of all, the tax at issue must be of the dischargeable kind (income taxes for instance) and the tax must have been due and owing for a period of more than 3 years from the most recent date the tax return was due.

2. The tax return for the tax delinquent debt must have been filed more than 2 years before the current bankruptcy case was filed.

3. The tax debt relief at issue has been assessed by the taxing authority for more than 240 days prior to the filing of the bankruptcy case (federal taxes are usually assessed within 6 weeks of the filing of the return, the States vary).

4. The debtor, in filing the return must not have attempted to evade the paying of the tax nor can the return filed by the debtor be a willfully “fraudulent” return.

Effect of Offer in Compromise
An extension of the time period and offer in compromise stops any action from the IRS. Tax Return Must be Prepared Properly. Again, the “tax return” filed must actually be an acceptable tax return and not just a mere ruse of filing.


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