IRS Tax Bill and the ability to Bankrupt it.

It is a common misconception that tax bills can not be bankrupted. There are some cases where the tax liabilities are not eligible to be included, but other times, bankruptcy code does allow the tax bills to be relieved from the debtor.

One way to quickly assure that the debt is going to be yours, regardless of bankruptcy filing is to be found guilty of tax fraud. This is serious and the government will not allow you to bankrupt any of the tax fees, fines or assessments. Other situations where bankruptcy will not help you include not filing a tax return or not listing the tax bill as a liability when you file the bankruptcy.

If you filed a tax return, even if you were audited, and no fraud was determined then there does come a point when you can include the tax bill amount in the bankruptcy and have the debt discharged. Once you do this, the IRS can no longer attempt to collect the tax bill and must stop any proceedings accordingly.

The Bankruptcy code sections 523 and 527 permits IRS taxes to be included and discharged in some situations. Tax penalties for non-filing, late payments, late deposits, and tax penalties for late estimated payments can usually be included and discharged. Additionally, income tax, excise tax, and gift tax which is three years old is usually acceptable to be included in you bankruptcy filing. The key here is that the aforementioned must have been filed at least two years prior to the bankruptcy petition and/or it must have been assessed as an IRS tax audit deficiency for at least 240 days.

While including tax bills in a bankruptcy filing can be tricky, it is possible. Because tax law and bankruptcy code is so extensive and complicated, it is strongly recommended that you seek the advice and the services of a professional. Attempting to include a tax bill in a bankruptcy yourself may result in even more fines, penalties, interest and possibly even loss. Perhaps looking for a tax attorney who can file a bankruptcy or a bankruptcy attorney with tax experience may be the best idea.