When it comes to financial challenges, few issues are more stressful than dealing with the Internal Revenue Service. Bankruptcy can help – even under the threat of penalty assessments.
Colorado Springs Bankruptcy Attorney Stephen H. Swift has helped countless clients secure the fresh financial start that comes with a discharged bankruptcy. That protection is available to all consumers – even when dealing with the IRS or debt owed to the federal government. Filing for bankruptcy in Colorado will result in the issuance of an automatic stay, which can halt pending collection actions.
Colorado Springs Bankruptcy and the IRS
- Bankruptcy won’t erase tax liens, even when the underlying debt is forgiven – another reason why dealing proactively with tax debt, using an experienced attorney, is best done as soon as possible.
- Chapter 7 may result in the liquidation of some tax debt, while Chapter 13 can sometimes result in a negotiated settlement.
- Complications abound when dealing with the feds. For instance, filing bankruptcy on tax debt can result in more time for the government to collect. The IRS typically has 10 years to collect owed taxes. However, that time is tolled (stopped) during a bankruptcy case and for six months thereafter.
Tax Forgiveness and Bankruptcy in Colorado Springs
A Colorado Springs bankruptcy lawyer should always be consulted when dealing with the Internal Revenue Service during a business or personal bankruptcy. The government has established strict criteria:
- Type of Taxes: Income taxes may be eligible for forgiveness; not other types of taxes, such as payroll taxes.
- Criminal Allegations: Those accused of tax fraud or tax evasion are not eligible for forgiveness.
- 240-day rule: Taxes must have been assessed at least 240 days prior to filling.
- 2-year rule: Tax return was filed two years before bankruptcy.
- 3-year rule: Taxes must have been due at least three years prior to filing.
When dealing with the IRS, you often only have one chance to get it right. And the last thing you want is to try to correct errors or otherwise put yourself at the government’s mercy. As you can see by these rules, filing late enough to include the maximum allowable tax debt, but early enough to avoid tax liens, can be critical. This is best done with an experienced attorney and proper planning.
At the Law Office of Stephen H. Swift, we are committed to guiding you on the path to a fresh start. Call today for a free initial consultation or contact us through this website.
Colorado Springs bankruptcy – 866-893-2440 or 719-520-0164 – legal consultation
