| Most people fall on financial hard times, regardless of | | | | taxpayer who's filing for bankruptcy. You have more |
| the causes. The IRS may feel that they also have to | | | | serious IRS problems on your hand if you're conducting |
| be settled for tax debts, increasing the amount owed | | | | fraud. |
| to creditors. And unlike other bill collectors, the IRS can | | | | The statute of limitations is effectively lengthened |
| be very ruthless in their efforts. If the IRS decides to | | | | when you file for bankruptcy. Until the bankruptcy is |
| pursue certain collection methods, they could wreck a | | | | dismissed or discharged, the 'clock' stop. The clock |
| taxpayer's life definitely. What most people don't know | | | | ticks on from that point forward if it's dismissed. |
| is that filing for bankruptcy may enable them a degree | | | | The sole form of bankruptcy that will erase any tax |
| of protection from some of the worst tactics | | | | debts effectively is the Chapter 7 bankruptcy. There |
| employed by the IRS in their debt collection practices. | | | | are specific conditions and requirements that have to |
| Bankruptcy is usually misconstrued by taxpayers. It is | | | | be met in order for tax debts to be eligible to being |
| viewed as a simple way to escape from debts. | | | | discharged in a Chapter 7 bankruptcy. During the |
| Bankruptcy isn't a simple escape. Bankruptcy lets | | | | bankruptcy proceeding, the three-year rule should be |
| people look for relief from debt legally, including tax | | | | met, for example. A tax return filed at least 3 years |
| debt. There's a significant chance that your tax debts, | | | | before filing for bankruptcy is the basis for tax debts in |
| along with your regular debts, can be erased if you file | | | | the three-year rule. Generally, this points to April 15 of |
| for Chapter 7 bankruptcy. This can happen, but there's | | | | the year that the return was really filed, but it also |
| of course no guarantee that your tax debt will be | | | | includes extensions. |
| considered. For anybody filing a Chapter 11, 12, or 13 | | | | There's also the 2-year rule which includes taxes filed |
| bankruptcy, they will be provided the opportunity to | | | | two years before bankruptcy. Another rule is the |
| move the IRS into settling for an installment deal and | | | | 240-day rule, applicable to taxes assessed 240 days |
| solve their IRS issue. | | | | prior to bankruptcy filing. |
| You get an 'automatic stay' or legal protection when | | | | However, even if a Chapter 7 bankruptcy is filed, |
| you file for bankruptcy. As soon as you have filed for | | | | loopholes still enable the IRS to collect. If the IRS filed a |
| bankruptcy, all of your creditors, including the IRS, | | | | tax lien before the bankruptcy was filed, then, even |
| should cease all actions against you. The sole way | | | | after filing, the IRS still has first right to any property |
| collectors can bypass the stay while your bankruptcy | | | | that the taxpayer held at the time of filing for |
| is still being dismissed or discharged is to appeal to the | | | | bankruptcy. The other forms of bankruptcy, Chapter 11, |
| bankruptcy court. Judges rarely lift the automatic stay, | | | | 12 and 13, are normally re-organization bankruptcies, |
| although the IRS is a government office. Typically, in | | | | and their primary advantage is to buy time to pay a |
| order for that to happen, the IRS is liable for proving | | | | tax debt and solve their IRS issue. |
| that a form of fraud is being conducted by the | | | | |