IRS Tax Debt Relief
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IRS Tax Debt Relief
Tax debt can become a serious burden with stiff penalties and interest charges that make the balance ever larger. Financial hardship can make it very difficult or even impossible to ever pay back the taxes you owe.
If you owe taxes to the IRS, bankruptcy may be an option that can give you immediate relief and get the balance discharged. There are very strict requirements you must meet to qualify for tax debt discharge through bankruptcy. A Las Vegas bankruptcy lawyer can help you navigate the complex bankruptcy law to stop the tax penalty consequences you are facing.
The Automatic Stay in Bankruptcy
As soon as you file for Chapter 7 or Chapter 13 bankruptcy, there will be an automatic stay that prevents most creditors, including the IRS, from initiating and continuing debt collection against you. If any creditor wants to collect on debts, they must ask the court for permission for relief from this automatic stay. The automatic stay will remain in place until your case is closed after the discharge, if your case is dismissed without a discharge, or if the court lifts the automatic stay for a creditor.
What Happens to Tax Debt in Bankruptcy?
Some tax debt can be discharged or wiped out through bankruptcy but some types of tax debt cannot be discharged. In most cases, you can discharge tax debt if the following are true:
- The tax was due at least 3 years ago
- You filed your return more than 2 years ago
- The IRS assessed the tax at least 240 days ago
- You did not commit tax fraud or evasion
Chapter 7 bankruptcy, the most popular option, wipes out all dischargeable debts, including dischargeable tax debt. If you have tax debt that cannot be wiped out, Chapter 7 bankruptcy will at least provide temporary relief from collection activities. The only type of tax that can be discharged through Chapter 7 is income tax owed on a federal or state income tax return.
With Chapter 13, you will need to pay off priority tax debts over the course of 3 to 5 years with a structured repayment plan. As long as your case is active and you keep up with your bankruptcy payment plan, the automatic stay will remain in place and the IRS cannot attempt to collect the debt outside of your bankruptcy. Most of the penalties incurred on the debt are not considered part of your priority tax debt and there will be no further penalties during your case.
Contact a Las Vegas IRS Debt Attorney Today
Even if your IRS tax debt cannot be discharged in bankruptcy, a bankruptcy attorney can help you. There are many options available to you, including an IRS payment plan, an offer in compromise, or a Chapter 13 bankruptcy to restructure your debt and get rid of the penalties and interest charges you are paying on your tax debt.
If you are struggling with a substantial amount of IRS tax debt and feel like you have no way out, contact Vegas BK for a free consultation with a bankruptcy lawyer in Las Vegas to explore all of your options.