“If you have tax debt and other creditor issues like credit debt or medical debt, filing bankruptcy can be a good option. However, some tax debts may not be dischargeable and may remain after a bankruptcy discharge.”
- Alyssa Maloof Whatley
How Can I Declare Bankruptcy?
Before you file your petition with the bankruptcy court, you should speak with a qualified tax attorney who can review your tax debt and filing status and identify whether bankruptcy can eliminate your tax obligation.
Certain types of tax debt can be wiped out in a Chapter 7 bankruptcy if conditions are met:
Your debt is income tax debt owed to a state or federal taxing authority.
Your tax debt is not related to fraudulent tax return or any you didn’t willfully evade your obligation pay taxes.
Your tax debt was due at least three years prior to filing bankruptcy including any extensions.
You have filed a tax return at least 2 years prior to filing for bankruptcy.
If the Service has filed a Substitute For Return (“SFR”) prior to you filing a return, this can cause the debt to not be dischargeable.
The circuits are split on late filed returns prior to the Service issuing an SFR on whether that tax is dischargeable (so dischargeability can depend on where you live, until the Supreme Court decided to rule on this issue).
Your tax debt was assessed at least 240 days prior to filing bankruptcy.
If your tax debt cannot be discharged in bankruptcy, you may have other options to explore with an experienced tax attorney. ”
- Alyssa Maloof Whatley
“As a CPA, I have worked closely with Alyssa to help with my clients' complicated tax issues. She is very honest, detailed, and responsive and will hold a client's hand until the issue is resolved and provide honest and clear advice along the way. I've seen her greatly reduce client's tax liabilities.”
“From the moment I started working with Alyssa, my distress & blood pressure decreased and my confidence increased that all of this would be okay! Super smart, very knowledgeable, and just delightful to work with. I'm so relieved and encouraged!”
“Alyssa and her team were fast, to the point and so professional with handling an issue I had with the IRS! She promised that the situation would be handled and in just a few short weeks she delivered on that promise. Thank you so much!”
“I find this attorney to be very honest and willing to assist her clients by guiding them in the right direction. I would recommend her to anyone that has a question on matters of her expertise. She is very knowledgeable and a pleasure to work with.”
“Alyssa is an amazing attorney! She is knowledgeable, efficient, and effective! Also, she is quick to respond, extremely pleasant, and very reassuring. We are so grateful for her expertise and help! Highly recommend!”
“Alyssa has helped me and my parents with an overwhelming tax issue. Something we never thought could be done. She's so kind, patient, thorough and knows tax law. I'd recommend her 100% to anyone when it comes to dealing with the IRS.”
“When I first spoke to Alyssa I was facing an IRS Audit for two years at the same time and felt extremely overwhelmed. Alyssa outlined a solid approach and was very easy to talk to and understand. My tax liabilities were brought down by 50%.”
“I was reluctant to reach out due to all the previous calls to other offices who where going to charge me more than what I owed on my taxes. I spoke with the Alyssa, she was very nice and it did not feel like a sales call. She helped me understand the type of letter I received and patient assisting me.”
“If you need legal assistance with your taxes, I strongly recommend Alyssa. Receiving a large tax notice from the IRS was very scary. Alyssa’s calm and level-headed demeanor helped ease my concerns. She responded quickly to my questions and knew just what to do.”
Pro Tip:
Chapter 13 isn’t for everyone.
While Chapter 13 can be helpful to some, it can be harmful for others as the statute of limitations on collection of the tax debt is tolled while you are in bankruptcy. This means that if you don’t complete the plan and get a discharge, you could have made a lot of payments to the IRS while allowing additional time for them to collect.
“Using Chapter 13 to enter into a more favorable repayment schedule needs to be thoughtfully considered. Before you file your petition, talk to a tax attorney with bankruptcy experience. ”
- Alyssa Maloof Whatley
What Types Of Tax Debts Cannot Be Discharged In Bankruptcy?
While you can usually discharge old income tax debts in a Chapter 7 filing, there are plenty of tax obligations that aren’t eligible for relief even in bankruptcy.
Some taxes that aren’t dischargeable in bankruptcy include:
FICA or “trust fund” taxes.
Sales taxes collected from customers.
Recent property taxes.
Non-punitive tax penalties less than 3 years old.
Employment taxes.
You’ll need the guidance of an experienced attorney to review your financial situation and see if pursuing bankruptcy can provide you with any tax debt relief.
