Can Bankruptcy Do Anything About the Taxes I Owe?
Claiming more exemptions to reduce taxes is a common strategy used by people who are trying to avoid bankruptcy. Unfortunately, this is also one of the best ways to put yourself on bad terms with the biggest, baddest creditor on the block — the IRS.
If you're considering bankruptcy and have been paying less on your taxes to cover other debts on a monthly basis — or you haven't been filing returns because you can't afford to pay the IRS what you owe — the time to talk to an attorney is now.
At Prescott & Pearson, P.A., you'll find the answers and experienced legal help you need to tackle today's financial problems — even if those problems involve the IRS. We have handled over 70,000 consumer and small business bankruptcy cases in Minnesota. In fact, this is all we do. And more importantly, it's something we've been doing well for more than 35 years.
Learn more about bankruptcy, taxes and your debt relief options by calling or contacting our offices for a free consultation today.
Bankruptcy and Taxes
In a Chapter 7 bankruptcy, most people can discharge income tax debts that are more than three years old from the date they should have been filed — provided tax returns were actually filed for those taxes more than two years ago and there has been no recent assessment of additional taxed owed. Chapter 7 will not allow you to discharge taxes that are less than three years old, business taxes, sales taxes or payroll taxes.
If Chapter 7 isn't an option Chapter 13 may be a better option — your tax debts can be included in your repayment plan.
Filing bankruptcy has important benefits with regard to taxes:
- Number one: The automatic stay means that the IRS has to cease any collection efforts pending against you.
- Number two, new penalties or interest will not accumulate during your Chapter 13 repayment plan in most cases.
"This Is All We Do and We Do It Well."
Minneapolis-St. Paul: 651-968-8096 / Statewide Toll-Free: 888-366-0827
For answers to any other questions about bankruptcy and taxes — don't hesitate to call or contact our lawyers in the Twin Cities area for a free consultation.
