Is the IRS taking your tax refund year after year from a tax debt that is more than three years old?
Do you have large old debts that you cannot pay? Did you get a first time home buyer tax credit in 2008 but then found out that you did not qualify, or have sold the home before the three year residency requirement? Did you have an audit last year that left you with a large tax debt from income taxes?
IRS tax problems can be real and can last for years. In some cases, IRS tax problems can be solved through bankruptcy. Bankruptcy laws say that income tax debt can be wiped out in when the following conditions apply:
1) The tax debt is for income taxes . Other taxes such as payroll taxes cannot be extinguished in bankruptcy.
2) There is no fraud. If tax debt is from a willful evasion of taxes or knowingly filing a false tax return, this debt will not be wiped out in a bankruptcy.
3) The tax debt is at least three years old. This is measured by the deadline for filing the tax return, for example 2008 taxes are due April 15th 2009, unless an extension is filed.
4) You filed the tax return at least two years ago. It is important to file a tax return every year, even if you think that you do not owe taxes, because if you are later audited and find that you did owe taxes, the debt will not be wiped out in a bankruptcy. Note that the IRS filing of a Substitution for Return (SFR) is not treated as a filing for the purposes of bankruptcy law.
5) The tax was assessed more than 240 days ago. If there was an audit adjustment or an amended return, this can create a new date for assessment. Any “Offer In Compromise” (OIC) will extend the 240 days meaning that you do not get to count any time after an OIC is filed towards the 240 days.
The conditions to discharge or wipe out debt from the IRS must all be met as of the filing date of the bankruptcy. If the conditions are not met on the day that the bankruptcy is filed, then the tax debt is not discharged.
By working with a bankruptcy attorney you can make this the last year that the IRS takes your tax refund if you qualify for a discharge. The Carroll Law Firm offers a free initial consultation to determine if bankruptcy is the right solution for you. Call 623-551-9366 to schedule your free consultation.
