Bankruptcy to Eliminate IRS Debt

 

Bankruptcy is a legal process that can help you get out of debt. If you have unpaid taxes, you may be wondering if bankruptcy can help you eliminate your IRS debt.

The answer is not always straightforward. In some cases, bankruptcy can help you eliminate your IRS debt. However, there are also some cases where bankruptcy will not discharge your IRS debt.

Which Types of IRS Debt Can Be Eliminated in Bankruptcy?

Not all types of IRS debt can be eliminated in bankruptcy. The types of IRS debt that can be eliminated in bankruptcy include:

• Income tax debt: This includes both individual and business income tax debt.
• Estate tax debt: This debt is owed by the estate of a deceased person.
• Gift tax debt: This debt is owed by the person who gave a gift that was not properly reported to the IRS.

Which Types of IRS Debt Cannot Be Eliminated in Bankruptcy?

The following types of IRS debt cannot be eliminated in bankruptcy:

• Penalties: This includes penalties for late filing, late payment, and underpayment of taxes.
• Interest: This includes interest that has accrued on your unpaid taxes.
• Tax debt that is not dischargeable: This debt includes tax debt that is incurred through fraud or willful neglect.

Can Bankruptcy Eliminate All of My IRS Debt?

Even if your IRS debt is dischargeable in bankruptcy, it is important to note that bankruptcy will not eliminate all of your IRS debt. For example, if you have a tax lien on your property, the lien will remain in place even after you file for bankruptcy.

If you are considering bankruptcy to eliminate your IRS debt, you should speak with a tax professional. A tax professional can help you determine if bankruptcy is the right option for you and can assist you with the bankruptcy process.