Tax Debts and Tax Liens

Posted on February 7, 2014 at 6:00am by

If you are interested in discharging tax debts in bankruptcy, The Sader Law Firm can help. There are certain rules that apply in order for that to happen. At a minimum, filing a petition for bankruptcy stops collection action during the pendency of the bankruptcy proceeding.

Tax debts which are dischargeable

If the following conditions are met, the tax debt, including penalties and interest, may be discharged at the end of the Chapter 7 Bankruptcy proceeding:

  • The taxes are income taxes
  • All outstanding tax returns have been filed
  • You did not engage in any fraud or tax evasion
  • The taxes you want discharged were originally due at least three years prior to your filing for bankruptcy
  • The tax return for the debt you want discharged was filed at least two years prior to the bankruptcy filing date
  • The IRS assessed the debt at least 240 days prior to the date you file your bankruptcy petition

At the close of a Chapter 13 Bankruptcy, which is usually three to five years after the initial filing, if the conditions you agreed to have all been met and all required payments made, the remaining tax debt may be discharged.

Tax liens

If either the state or federal government has filed a lien against your property, it becomes a secured debt that is not discharged like other tax debts. However, you can file a Chapter 13 bankruptcy, which allows you to pay off the tax lien over a period of up to 5 years at reduced interest rates. This is a totally separate action and is not part of the bankruptcy proceeding. The filing of a Chapter 7 or Chapter 13 will also stop the tax sale of your home.

Our attorneys at The Sader Law Firm are experienced in all aspects of bankruptcy law whether you want to file for bankruptcy in Missouri or bankruptcy in Kansas. We will evaluate your case and help you decide whether a Chapter 7, Chapter 11 or Chapter 13 bankruptcy will work the best for you. We will help you get that fresh start promised you under the Bankruptcy Code.



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