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Eliminate Back Taxes

If you owe income taxes to the IRS, you may be able to discharge your tax obligation. Your ability to discharge will depend upon the type of tax involved, the age of the tax (the year or years for which you owe) and when you filed the tax return for the tax year involved.

There are several conditions that must be met to discharge taxes.  Generally if you owe income taxes for a tax year that is more than three years old and the tax return for that year has been filed for at least two years the taxes and the IRS assessed the tax more than 240 days before filing, the tax can be discharged. For instance if you owe taxes for calendar year 2010, you filed a timely tax return in April 2011 and the IRS assessed the tax shortly thereafter, the taxes today would be considered “stale” and would be dischargeable.

Taxes, however, are not always dischargeable. Taxes such as sales taxes or trust fund taxes cannot be discharged. In addition, if a fraudulent tax return is filed or someone willfully evades payment of income tax the taxes are, likewise, not dischargeable. If the debtor does not file a return and the IRS files a “substitute for return” the taxes assessed will not be dischargeable because an IRS-prepared return is not considered timely return for the discharge of taxes.

Regardless of whether taxes are dischargeable, if the IRS or state entity recorded a lien that has attached to property you own, the taxes are “secured” and different rules would apply. The taxes may be dischargeable if the above conditions exist, but entry of discharge will no extinguish the lien, which will only terminate pursuant to federal or state law.

Copyright 2018 - Bankruptcy - Robert E. Tardif Jr., P.A.