If you are like a lot of people in Phoenix AZ this year, your tax return may not have returned as much as you might have hoped. Worse yet, you might even owe the IRS and have started to incur more tax debt than you can handle.
There are many types of debt. The problem, though, with tax debt is that it can incur relatively large financial penalties or even jail time. You could also have your wages garnished or levies placed on your property if you have incurred unpaid tax debt.
Ways of Approaching Tax Debt
However, it is possible to discharge your tax debt, along with interest and penalties, but only if you meet a highly specific set of criteria.
- The taxes must be income taxes.
- There was no effort to willfully evade taxes or the filing of a fraudulent return.
- The tax return that incurred the debt was filed a minimum of two years before filing a petition for bankruptcy.
- The debt was due a minimum of three years before the filing of your bankruptcy petition.
- The IRS assessed your income tax debt a minimum of 240 days prior to filing.
The bottom line? When you have a complicated tax debt picture, help from a debt relief attorney is urgent – and often affordable.
Getting a Handle on Debts
There are numerous myths surrounding debt, including the one about how bankruptcy “takes care of all of your debts and allows you to go on with your life with a completely clean slate.” However, that’s not entirely accurate. Some debts cannot be wiped out by filing for Chapter 7 (a liquidation bankruptcy) or a Chapter 13 (a reorganization bankruptcy similar to a business’ Chapter 11). Below is a list of debts not discharged by bankruptcy:
- Debts left off the bankruptcy petition – which is why it is important to bring ALL of your paperwork to a debt relief attorney when filing for bankruptcy.
- Child or spousal support
- Student loans (except under specific circumstances)
- HOA fees
- Fines, restitution, court fees, and other debts owed to government agencies and courts.
- Most types of state and federal taxes.
- A tax lien filed against real property before filing a bankruptcy petition.
If you do not meet these criteria but have other debt piled up, then bankruptcy might create a path for you to discharge other debts while freeing up income to pay your tax debts. Contact a Phoenix AZ debt relief attorney who cares, Larry P. Karandreas, and get out from under burdensome debt.