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    Estate & Probate » Blog » Forgiving Back Taxes in Bankruptcy

    Forgiving Back Taxes in Bankruptcy

    Forgiving bankruptcy can help individuals who have experienced tax related debt. Being subject to taxes from the Internal Revenue Service can be a particularly harsh process. Many individuals who are struggling financially can be faced with bank account levies, property liens, and wage assignments. Many individuals should remember that unpaid income taxes are often dischargeable in bankruptcy, which can make the assistance of a skilled attorney particularly beneficial.

    Applicable Law Regarding Release from Taxes

    The government has distinguished several particular situations in which individuals are able to escape debt, which include the following situation:

    • Taxes Due Over Three Years Ago Are Dischargeable. Law in the state of Oklahoma  states that income taxes are dischargeable if the taxes were due at least year ago. For example, if an individual filed for bankruptcy in March of 2017, the individual would be able to discharge taxes prior to 2014.
    • Taxes Must be Filed Over Two Years Ago. The taxes in question must also have been filed at least two years ago.
    • Income Taxes Only. The only type of federal or state taxes that are dischargeable in Chapter 7 bankruptcy include income taxes.
    • 240 Days After Tax Assessment. Additionally, in order to discharge personal income taxes, an individual’s tax assessment must not have come within the previous 240 days. In the event that an individual submits an offer to compromise, this 240 day period does not begin to run until the Internal Revenue Service has considered an individual’s offer.
    • Fraudulent Tax Reporting. One additional requirement is that individuals who are found to have filed a fraudulent return or willfully attempted  to evade tax payments will not be discharged of the obligation to pay these taxes regardless of what amount of time has elapsed.
    • Tax Liens. A lien filed by the Internal Revenue Service against an individual’s home prior to filing bankruptcy will not be extinguished. As a result, the Internal Revenue Service can still collect unpaid taxes in the case that real estate is sold. Individuals who are faced with such a situation should remember that a tax lien remaining on a piece of property will disappear after a 10 year period has elapsed. In many cases, the Internal Revenue Service will apply other methods like wage garnishment or bank account levies before attempting to take possession of and sell an individual’s house or real estate.
    • The Role of Property Taxes. Individuals should remember that property taxes are dischargeable after one year from when these property taxes begin to accrue. Individuals should remember that they will be able to repay the interest of property taxes and once these taxes are paid then any applicable liens will be removed.  

    The Assistance of a Skilled Bankruptcy Attorney

    Individuals must remember that back taxes in the bankruptcy process are capable of being forgiven in several situations. As a result, if you require assistance with back taxes during the bankruptcy process, the assistance of a talented attorney like Jim A. Lyon can help properly handle this issue. Contact Attorney Lyon today to make sure that your bankruptcy case resolves in the best possible manner.

    Ethan Moran
    Ethan Moran
    09:36 28 Dec 22
    To my wife and I, our probate case was complicated. Not to Jim! He made it look so easy, and his attention to detail is incredible. Highly recommend to anyone seeking an estate planning lawyer.
    Philippe Joshua
    Philippe Joshua
    17:56 30 Nov 22
    Jim's firm was referred to me by a friend who knew I was looking for an estate planning lawyer. I can't say enough good stuff about him. He's genuine, thorough and highly skilled. Strongly recommend.
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    Estate & Probate » Blog » Forgiving Back Taxes in Bankruptcy