The IRS Cannot Collect If You are Bankrupt! Numerous people can have financial issues and owe money. To collect tax debts, the IRS employs specific techniques, making it the most ruthless of creditors. You can get the IRS off your case with the protection offered by a bankruptcy claim. Contrary to popular belief, bankruptcy isn't a simple escape from debts. People can legally seek debt relief with this, and tax debts are included. Filing for Chapter 7 bankruptcy makes it possible for all debts, including tax debts (but without guarantee), to be cancelled. People are given the chance to settle their IRS problems through a payment plan when they file for Chapter 11, 12, or 13 bankruptcy. Filing for bankruptcy legally protects you from all actions made by the IRS and other creditors against you with an 'automatic stay'. Creditors appealing to the bankruptcy court is the only way for the automatic stay to be lifted. However, this happens very rarely. For an automatic stay to be lifted, the IRS and other creditors have to be able to give proof of fraud in the bankruptcy claim. A more serious IRS issue is likely if fraud is found. Until the bankruptcy claim is discharged or dismissed, tax debts are merely frozen. The statute of limitations resumes when bankruptcy is dismissed, effectively lengthening it. A Chapter 7 bankruptcy has the chance to clear when specific requirements like the three-year tax debts considered are at least 3 years old, the year it was filed, as stated in the 3-year rule are extensions. all tax debts definitely rule are satisfied. All beginning from April 15 of rule. Also included in the
There is also the two-year rule which includes taxes filed two years before bankruptcy. Another rule is the 240-day rule, applied to taxes assessed 240 days prior to bankruptcy filing. But even if a Chapter 7 bankruptcy is filed, loopholes still allow the IRS to collect. The IRS has first rights to any property if they recorded a tax lien before the bankruptcy was filed. The other forms of bankruptcy, Chapter 11, 12 and 13, are simply re-organization bankruptcies, and their primary advantage is to buy time to Settle a tax debt and solve their IRS issue. Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He also spends a great deal of time traveling the nation providing training to attorneys, CPAs and Enrolled Agents on how to handle their toughest cases with the IRS. If you would like more information about his services please visit http://getirshelp.com.