Owe Back Income Taxes?
When you owe taxes to the government, you may find out that the Internal Revenue Service (IRS) and the Tennessee Department of Revenue have the ability to use liens and levies to obtain payment. However, in some cases, the bankruptcy process can be effectively used to reduce the consequences of tax debt.
I’m Steven Bilsky, a Memphis-based attorney with more than 39 years of bankruptcy experience. I can explain how bankruptcy may be able to help you reduce or eliminate some of your back taxes.
When Can A Bankruptcy Eliminate Your Tax Debts?
Many tax debts cannot be eliminated or reduced in bankruptcy. However, there are some exceptions. You may be able to get income tax debts discharged if all of the following are true:
- You filed your return on time.
- The taxes were due more than three years ago.
- You did not commit any tax fraud.
Payroll, employment and sales taxes cannot be discharged because technically, you are just holding them as a fiduciary on behalf of your employees or customers. Property taxes, in most cases, are secured by your property and cannot be discharged.
Can You Put Back Taxes On A Payment Plan?
Even if your tax debts cannot be discharged in Chapter 7 bankruptcy, it may be possible for you to pay them off through a Chapter 13 repayment plan. These plans give you three to five years to pay back your debts with no interest, late fees or other penalties.
As your lawyer, I can explain how to best resolve your tax issues in bankruptcy. In most cases, the terms of Chapter 13 bankruptcy payment plans are much better than the terms of installment plans offered by the IRS. Call my Memphis office at 901-525-6692 or use my online form to make an appointment.