downtown seattle skyline

Practice Areas

Bankruptcy, Chapter 13
Bankruptcy, Chapter 7
IRS Tax Relief
Probate
Wills, Trusts & Estates
• Business Bankruptcy (coming)
Business Formation
Corporate Contracts
Real Estate Transfer & Leases

Disclaimer

Bankruptcy FAQs

Will My Tax Debt Go Away if I File Bankruptcy?

I am frequently asked if taxes will 'go away' when someone files bankruptcy. The answer is that they MAY go away. Many other bankruptcy law firm sites simply tell you that taxes don't go away in a bankruptcy; that advice is probably coming from bankruptcy firms that don't want the extra work of advising you regarding your tax debts.

Here’s the deal on whether the taxes go away or not. You can discharge income taxes a) if the returns were due more than three years ago, b) if you actually filed the tax returns at least two years before the bankruptcy, and c) if the tax has been assessed for more than 270 days.

There are several circumstances that stop the above time periods from running. If you filed bankruptcy before, those time periods are stopped for the duration of your bankruptcy. If you filed an offer in compromise with the IRS, that too will stop those time periods from running.

Also, when the IRS gets impatient with you for not having filed your tax return, they can file one for you (i.e., a "substituted return"). They guess how much you owe based on W-2s or 1099s that have been filed for you and they do not give you any breaks in preparing your return (big surprise). If the IRS files a substituted return for any tax year, you can’t discharge that year’s tax (unless you live in the 6th Circuit; there is a split among the circuits on that issue).

Most clients will not remember exactly when they filed and virtually no one knows when a particular year's tax was assessed. You can call 1-800-829-1040, wait on hold, and then ask for an "account transcript." Or better and quicker, you can visit the IRS at one of the local IRS branch offices and just ask them in person for your transcript.

By the way, note that I started this page by talking about "income taxes" and not employee withholding taxes, trust fund taxes, and/or 941 taxes. You owe trust fund taxes on money you withheld from your employees’ paychecks and then did NOT send in to the IRS. The IRS considers those withheld funds to be money that you stole from the IRS. Not surprisingly, those taxes do not go away in a bankruptcy.

____________________________________

The Law Office of Matthew D. O'Conner is dedicated to helping clients file bankruptcy while retaining their dignity and pride. We provide assistance, legal counsel and advice and will be able to answer your bankruptcy-related questions and help you file a Washington bankruptcy.

Contact us today at (206) 782-0722 for a free consultation - it's entirely confidential.

More Bankruptcy FAQs

mdoLaw Bankruptcy Blog

____________________________________

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

This web site is for general informational purposes only and is not legal advice.

The information contained on this web site is in no way intended as a substitute for legal counsel, and your receipt of the information does not give rise to a lawyer-client relationship between Matthew D. O'Conner and you. The ramifications of the law for any particular situation depend on a variety of factors, so you should seek professional legal counsel before acting upon any information contained on this web site.

 


Office Location

8011 Greenwood Ave. N.
Seattle, WA 98103

P: 206.782.0722
F: 206.783.0233
E: info@mdoLaw.com

mdoLaw Bankruptcy Blog

What dooes reorganization mean? 09/09

Will I lose everything if I file bankruptcy in Washington state? 07/28

If my house is foreclosed on, can the bank still come after me? 06/23

What filing fees are involved in filing a bankruptcy? 02/08

What are my options to stop foreclosure? 01/12

Will filing bankruptcy stop foreclosure on my house? 01/03

Can my bank still foreclose while I am in a trial loan modification? 12/22

If I file bankruptcy less than 11 days prior to my foreclosure sale, will that stop the sale? 12/15

Will my tax debt go away if I file bankruptcy? 08/25

What happens with the second loan if my house is foreclosed? 05/27

Washington State passes Mortgage "Foreclosure Fairness Act" 05/09

Bank of America suspends foreclosures nationwide. 10/01

Mortgage servicers can no longer deny HAMP loan modifications based on your being in a bankruptcy. 06/01

Will filing bankruptcy ruin my credit record? 05/22

How long will a foreclosure affect my ability to get a home loan? 05/04

What is the difference between a "mortgage trustee" and a "bankruptcy trustee?" 04/21

How long does it take to file Bankruptcy? 04/16

Is it better to short sale my house or to file Bankruptcy? 04/12

Prior Bankruptcy Blog Postings

The Law Office of Matthew D. O'Conner represents clients in Seattle, Shoreline, Ballard, Greenwood, Bellevue, Bothell, Kenmore, Burien, Mountlake Terrace, Edmonds, Lynnwood, Kirkland
Puyallup, Milton,
Bremerton, Mill Creek, Tacoma, Phinney Ridge, Renton, Woodinville, Kent, King County, Snohomish County, Pierce County and tax clients throughout Washington State.

We are a debt relief agency. In addition to other practice areas, we help people file for bankruptcy relief under the Bankruptcy Code.


Copyright © 2014 Law Office of Matthew D. O'Conner. All rights reserved. Reproduction in whole or part without permission is prohibited.