IRS Bankruptcy

Can it be done? The answer, in some cases, is yes. IRS Bankruptcies are not extremely common, and are certainly not promoted by the IRS as an alternative, but the reality is that when filing for Bankruptcy, some taxes, penalties and interest charges do in fact qualify for complete discharge.

IRS Bankruptcy Qualifications

Avoiding tax liabilities through bankruptcy is not as easy as it sounds. You cannot simply file for bankruptcy and automatically have tax debts discharged. In fact, your income tax liabilities must qualify for discharge. Having high tax liabilities is never a good reason to file for bankruptcy, as because of the special nature of the debt, coupled with the stature of the IRS as a government organization, frequently your taxes will not be totally expunged. Understanding bankruptcy rules in regards to taxes is key to this process.

The fact is, the most common type of discharge-eligible taxes include old individual income taxes. Civil penalties are not eligible for bankruptcy discharge, among others. Certainly, when considering bankruptcy motivated mainly by high tax debts, consulting with a professional is absolutely key.

Contact us for a free consultation here. We can help you to decide whether bankruptcy will help you lower your overall taxes.

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