Using IRS Bankruptcy to Eliminate IRS Taxes and prevent IRS Tax Levy problems
Many taxpayers consider IRS Bankruptcy to Eliminate IRS Taxes or remove an IRS Tax Levy. But generally speaking, IRS Bankruptcy is an ineffective tool for Tax Debt resolution or IRS Tax Levy removal. Tax Debt is rarely discharged no matter what Chapter you file. If your Tax Debt is not discharged, collections efforts will resume full force and you'll be in danger of an IRS Levy. This article details a few reasons why Bankruptcy is not the ideal option to Eliminate IRS Taxes.
IRS Bankruptcy and IRS Tax Debt
When the IRS receives notice of IRS Bankruptcy immediate relief from collection actions is usually granted. The IRS will be required to take the following actions:
- Immediately suspend all action on the account
- Gather all relevant information
Here's what the IRS will need to know to Eliminate IRS Taxes:
- Current Status of the bankruptcy (open, closed?)
- Date the petition was filed
- Court location where the bankruptcy was filed
- Case (docket) number
- Chapter under which bankruptcy was filed
- Discharge date (if available)
- Method of closure (dismissal or discharge)
- Closure date if the case is closed
IRS Bankruptcy Filing Tip: You may try to file IRS Bankruptcy even though you can actually afford to pay the IRS to Eliminate IRS Taxes. Your case for Bankruptcy will be thoroughly examined. And if they find you have enough income to pay for your basic needs and your debts, they won't allow the IRS Bankruptcy. Your IRS Bankruptcy will be dismissed on Issues of Fairness and your IRS Debt will remain and it will be harder to Eliminate IRS Taxes or remove an IRS Tax Levy from here.
Why it's better to seek a resolution other than Bankruptcy
The bankruptcy court is not designed to determine tax issues. In fact, the bankruptcy court does not have the authority to determine the amount or legality of a tax, fine, or penalty (According to IRS Publication 908, Bankruptcy Tax Guide). In most cases, Tax Debt will not be discharged and the Tax Debt will remain.
Three Common Bankruptcy Traps: Why Bankruptcy doesn't work for Tax Debt.
1. Having Money and Assets
If you have plenty of money in the bank to satisfy your debt, your money will be seized to satisfy your IRS Tax Debt.
2. Filed Before?
If you filed under Chapters 7, 11, 12, or 13 and paid your unsecured creditors less than 70% of what you owed them, you cannot earn another discharge.
3. Secured Creditors
If a creditor has a right to take specific property to satisfy a debt, that creditor is secured. That means Tax Liens survive Bankruptcy. You either pay after IRS Bankruptcy, or the IRS can repossess your property.
There are many options for resolving Tax Debt. If you are not sure which route to take, consider contacting a qualified professional for advice or assistance. They can help you remove your IRS Tax Levy or Eliminate IRS Taxes completely.
