' Bankruptcy and Tax Debt - Law Offices of Robert M. Geller
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Can Bankruptcy Really Help You with a Tax Debt?

Bankruptcy can help you alleviate a variety of financial problems, both directly and indirectly. Many people assume that bankruptcy is just to help you get rid of credit card debt, but this is not the case at all. People opt to file for a variety of reasons, ranging from medical debt to consumer debt to foreclosure, and even tax debt.

If you are dealing with tax debt, and instead of bill collectors or banks calling you for payments regarding credit cards or your home you’re receiving letters (and threats) from the IRS, bankruptcy might be able to help.

Timing is Everything

The most important thing to know is that using bankruptcy to manage tax debt is different than using it to manage or eliminate other types of debt. There are several bankruptcy rules related to tax debt and it is imperative you work with an experienced attorney if you are filing for bankruptcy because of back taxes.

Even if your tax debt was not the final straw and something else drove you into bankruptcy, if tax debt is an issue you need guidance from someone who understands bankruptcy laws and how they relate to taxes.

What are a few of the most important things to know when it comes to bankruptcy and tax debt?

Timing is incredibly important when it comes to bankruptcy and tax debt.

In order to use bankruptcy to manage tax debt, the debt must be at least three years old or older, which is measured from the date the return was due to be filed. The money owed must also be assessed more than 240 days prior to filing for your bankruptcy.

Finally, the return must have been filed at least two years before your bankruptcy case. This means if you suddenly realize you have a huge bill due to Uncle Sam, you can’t file for bankruptcy and have that upcoming debt eliminated.

Filing a Late Return

In addition to the timing related to when a debt was due, many people also run into issues because they filed their tax returns late.

The Ninth Circuit Court ruled that if your taxes are filed so late that the IRS files a Substitute Filed Return (SFR), the taxes owed in relation to that return can never be discharged in a bankruptcy. (Other courts have ruled in favor of discharging, but only in instances when the taxpayer filed a return just a short time after the SFR.)

To read more about dealing with past due tax returns, check out this article from The Balance.

A word of advice: If you fail to file a return and make a payment by April 15th (the usual tax deadline), make sure you file by October 15th of that same year. You’ll need to request an extension and you’ll be forced to pay a late fee, but this avoids the IRS filing an SFR against you.

Dealing with Tax Debt through Bankruptcy

Tax debt can be some of the most intimidating there is to deal with. This is especially true when your situation is bleak and you know you’ll never be able to pay what you owe.

If you’d like to know more about how bankruptcy can help or you want someone to review your situation and help you assess your options, contact us at 813.254.5696 to schedule a free consultation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

How Often are Bankruptcies Denied?

Bankruptcy offers a lifeline for people drowning in debt. It provides a chance to start anew and regain financial stability....
Read More

How Much Debt Should I Have Before Considering Bankruptcy?

Dealing with overwhelming debt and financial hardship is difficult. The prospect of bankruptcy may offer a path toward relief, as...
Read More

How Long Does Chapter 7 Bankruptcy Take to Discharge?

Chapter 7 bankruptcy offers a fresh start and a path toward financial stability for people struggling with debt. But when...
Read More

Does Business Bankruptcy Affect Personal Credit?

Does Business Bankruptcy Affect Personal Credit? For entrepreneurs and business owners facing financial challenges, the prospect of business bankruptcy can...
Read More

Can I Get an Apartment After Filing for Bankruptcy?

Filing for bankruptcy often feels challenging and overwhelming. It also raises a variety of concerns. One of the most common...
Read More

Are SBA Loans Dischargeable in Bankruptcy?

Navigating the complexities of Small Business Administration (SBA) loans and bankruptcy can be a daunting task for many business owners....
Read More

How to Get Bankruptcy Off of Your Credit Report

Rebuilding financial health after bankruptcy is challenging, but that doesn’t mean filing is worth the effort. One common concern for...
Read More

What Happens When You File for Bankruptcy?

Contemplating bankruptcy is a significant decision that comes with many questions. If you're considering filing for bankruptcy, it's essential to...
Read More

Can I File for Bankruptcy If I Have a Job?

Many people considering bankruptcy are unemployed or know that unemployment is imminent. However, this isn’t always the case. In some...
Read More

Can Bankruptcy Stop Foreclosure?

Many people face the distressing prospect of foreclosure on their homes. If you find yourself in this situation, it's crucial...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions