Tax Debt Bankruptcy

Many of the clients we work with face significant state and federal tax debts.  For those with tax debt, it is no longer important how and why you’ve accumulated tax debt. It is now time to take a step towards freeing yourself from the tax debt you are currently facing. We realize that is easier said than done and at the moment, things might seem overwhelming. We are here to help. At Reynolds and Gold Law, our experienced bankruptcy attorneys work closely with you to determine what the best course of action will be for you. 

Schedule Free Consultation

Our team of attorneys has years of experience helping bankruptcy clients with debts through bankruptcy.  We cannot guarantee bankruptcy will help you with of all your tax debts in bankruptcy, we  will work hard to achieve the best outcome for you and your family. Contact us today to schedule your free consultation to discuss our tax issues. We will help you understand what is best for you and whether that includes filing for bankruptcy. 

Does Bankruptcy Clear Tax Debt? 

The most important question you may be asking yourself is, “Can I discharge my tax debt by filing for bankruptcy? The answer is, “It depends.” We would love to tell you that the entirety of your state and federal tax debt can be cleared by filing for bankruptcy, but that’s not true. That being said, the following tax debts can be discharged when you file Chapter 7 bankruptcy:

  • Federal or state income tax
  • Tax debt that is at lest three years old
  • Your tax debt is at least three years old
  • You filed a tax return that includes the debt in question at least two years before filing for bankruptcy
  • You did not commit fraud or willful tax evasion

If your tax debt meets the above criteria, there is a good chance we can help you eliminate it by filing for Chapter 7 bankruptcy.

For those choosing to file for Chapter 13 bankruptcy, your payment plan will address the tax debts.

Can Bankruptcy Remove IRS Tax Liens?

The IRS imposes a tax lien if you fail to pay your taxes on time. Essentially, when you have a federal tax lien, the IRS makes a claim to any property that you may own to recuperate the money you owe in taxes. Liens apply to the property you own from the date of the filing of the tax lien document.

Unfortunately, if the IRS filed a tax lien before you filed for bankruptcy, there isn’t much you can do remove the lein. The lien will remain against your property after the bankruptcy is finished if the tax debt is not repaid. Unfortunately, removing the lien requires that you pay the tax debt. In that event, the best advice is to consult a tax attorney to assist with negotiating the tax debt with a payment plan.