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Ask WALLSTREETESQ Your Own Question
Category: Bankruptcy Law
Satisfied Customers: 17080
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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I owe the IRS 100k for complicated back taxes and penalties

Customer Question

I owe the IRS 100k for complicated back taxes and penalties from 2002 - 2009. Can I list these debts in a bankruptcy since they are making it impossible for me to repay them with a reasonable installment plan.
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  mmdesq replied 4 years ago.

mmdesq : Discharge of taxes can be complicated and you should definitely hire an experienced bankruptcy attorney to help you. Income taxes can be dischargable if the tax return has beeb filed for the year in question and it is more than 3 years old from date of bankruptcy filing. You also would need to make sure tax was assessed in proper timeframe. Trust fund taxes and/or sales and use taxes are not are discharge. Witholdings taxes are never dischargable. I hope this helps.
JACUSTOMER-62s8u8re- :

I don't think I'm clear on your answer

JACUSTOMER-62s8u8re- :

Which is advisable a chapter 7 or a chapter 13?

mmdesq : The rule for tax dischargability is same for 13 or 7. If you can qualify for chapter 7 go that route as it is faster.
JACUSTOMER-62s8u8re- :

I realize that I asked my question on a Sunday afternoon but I do not feel that enough details were given.

Expert:  WALLSTREETESQ replied 4 years ago.
Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

It may be possible to discharge back IRS tax debt in a chapter 7. If you qualify for a chapter 7 due to your income, this can be done.

The rules are the following:

f the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions.
The due date for filing a tax return is at least three years ago.
The tax return was filed at least two years ago.
The tax assessment is at least 240 days old.
The tax return was not fraudulent.
The taxpayer is not guilty of tax evasion.
Return Due At Least Three Years Ago

The tax debt must be related to a tax return that was due at least three years before the taxpayer files for bankruptcy. The due date includes any extensions.
Return Filed At Least Two Years Ago

The tax debt must be related to a tax return that was filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date the taxpayer actually filed the return.
Tax Assessment At Least 240 Days Old

The IRS must assess the tax at least 240 days before the taxpayer files for bankruptcy. The IRS assessment may arise from a self-reported balance due, an IRS final determination in an audit, or an IRS proposed assessment which has become final.
Tax Return was Not Fraudulent

The tax return cannot be fraudulent or frivolous.
Taxpayer Not Guilty of Tax Evasion

The taxpayer cannot be guilty of any intentional act of evading the tax laws.
Some Tax Debts Not Dischargeable

Tax debts that arise from unfiled tax returns are not dischargeable. The IRS routinely assesses tax on unfiled returns. These tax liabilities cannot be discharged unless the taxpayer files a tax return for the year in question.