For many people, happiness is April 16 of each year. This date signifies the end of a stressful period of their lives since it is also the day after the federal income tax filing deadline. For those who have already filed their taxes (and are poised to get a refund), congratulations; you don’t have to worry about taxes and the Internal Revenue Service for another year.
For those who have not filed their income tax return (and are likely to owe money to Uncle Sam), we hope that you take advantage of the many options available to pay your tax bill. Unfortunately, there may be situations where your tax bill is much more than you can afford to pay; and when combined with your other personal debts, your financial situation could be dire.
In these situations, a Chapter 7 or Chapter 13 bankruptcy may be helpful. After all, bankruptcy can be used to discharge tax debt if it satisfies certain criteria. Essentially, the debt must be three years old or older, be associated with a legitimate tax return, not be assessed as penalties or interest, and must be assessed at least 240 days before the bankruptcy petition is filed.
If the tax debt satisfies these criteria, the debt may be paid over a period of time. If not, you may be able to take solace that other debt could be eliminated so that the tax debt could be paid appropriately. If you have further questions about whether bankruptcy is right for you, an experienced attorney can help.