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Tax Bankruptcies

Tax Bankruptcies

It is often assumed that tax debt cannot be discharged in a bankruptcy case. While this is true for most taxes, older taxes can be discharged in a bankruptcy proceeding. A “tax bankruptcy” is simply a regular bankruptcy which is timed to maximize the discharge of your taxes. Therefore, in certain circumstances, the bankruptcy will not only wipe out your credit card and medical debt, but can also wipe out your tax debt. In fact, bankruptcy can be a powerful tool in resolving your IRS tax debt, especially if it looks like an Offer in Compromise (“OIC”) might not work for you.

If you have this situation, your entire financial situation and timing has to be examined by an accounting, tax and bankruptcy professional. I can assist in this analysis to see whether, and the extent to which, your taxes can be discharged. Once this analysis is completed, a bankruptcy will be filed. If the tax debt is not yet eligible to be discharged, we can “wait” out the time period by entering into an agreement with the IRS to have you pay a small monthly payment until the required period of time has passed, at which time the actual bankruptcy can be filed. Once you have received your discharge in your bankruptcy, the IRS will be contacted to obtain their agreement that your tax debts were eliminated.

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