EP36: Is income tax debt dischargeable in bankruptcy?

Tax Man, Tax Relief Podcast

Is income tax debt dischargeable in bankruptcy?

Should you file for bankruptcy or work out your taxes separately? Before you make any decision, you need to determine two things.

First, you need to know what type of tax debt it is. Trust fund taxes, payroll taxes, and sales taxes are not dischargeable in bankruptcy.

Second, determine when your tax return was filed. This includes the year and the collection statute expiration date. The IRS has a certain time frame to collect a tax debt. If you’re nearing expiration, you can get your tax debt to expire without filing for bankruptcy. If it was filed within the last three years, it will be excluded from the bankruptcy filing.

Filing for bankruptcy stops collections and puts a stay on any statute expiration. This gives the IRS more time to collect on the tax debt, which is why it is important to do the proper analysis and have someone that understands the difference between tax returns and tax debts before you make any decision.

JLD Tax Resolution Group can help you solve a complex tax problem with ease. Schedule your free consultation at 201-479-2572 or visit www.201tax.com.