Another April 15th has come and gone. Have you submitted your tax returns yet? I certainly hope so. Unfortunately, you may have gotten stuck with a tax debt that you were not anticipating or cannot repay in a lump sum upon submission of your timely tax return. What are your options? Can you file bankruptcy on this tax debt? The answer is yes and no! This new tax debt is not yet eligible for discharge in a chapter 7 straight bankruptcy. You can, however, include this new tax debt in a chapter 13 debt consolidation bankruptcy. This is a form of bankruptcy where you can consolidate all of your debt for one monthly payment amount, including otherwise non-dischargeable tax debt. You will get the benefit of discharging future interest and penalty that would otherwise accrue on the tax debt outside of a chapter 13 payment plan.
An additional option for your 2014 tax debt might be to enter into an installment agreement with the IRS. This might be a smart option to take if you are not having issues or problems with other creditors. It is basically just a payment plan made directly with the IRS. Furthermore, if you have additional tax debt, you may be eligible to submit an offer in compromise (OIC) and agree to pay a reduced amount to the IRS over time. Older tax debt may even be eligible for discharge in chapter 7 bankruptcy. Discharging tax debt in bankruptcy, however, is dependent upon a number of factors and demands a careful and detailed analysis.
The attorneys at Bond and Botes are experienced with dealing with tax debt under all of these options. If you have tax debt that you cannot pay or are struggling with debt in general, please schedule a free consultation in one of offices.
- Filing Your Taxes While in Chapter 13 Bankruptcy
- How to Get Rid of Tax Debt
- Taxed on Debt Discharged in Bankruptcy