Even The IRS Forgives Debts Sometimes
Even with the tax credits available to people who have no sources of income other than the work of their own hands, the feeling of owing money to the IRS but not being able to pay it is all too familiar to many working Americans. How many times have you filed for an extension in April in the hopes that your financial situation would improve by October? Perhaps you even have several years’ worth of tax debts following you around. By now, you are well aware that Uncle Sam never forgets when you owe him money, but it may surprise you that he sometimes forgives unpaid tax obligations. It is not easy to discharge tax debts, but it is not impossible. Living with debt means constantly strategizing about which debts to pay now, and in what amount, to prevent things from getting worse. If you have decided that a bankruptcy filing is inevitable, then you are faced with even more of a balancing act of short-term and long-term debt obligation between now and the time you submit your bankruptcy petition to the court. For help thinking clearly about the relief you can get from filing for bankruptcy protection, including relief from tax debts, and charting a path to that relief, contact a Philadelphia debt collection abuse lawyer.
Strategize About Your Taxes and Debts Now to Prepare for a Successful Bankruptcy Filing Later
In general, the debts that the bankruptcy court automatically discharges are the ones owed to private creditors; these include unsecured personal loans, credit card debt, and medical bills, to name just a few examples. (The process for discharging debts is different for chapter 7 and chapter 13 bankruptcy, but both categories of bankruptcy filings enable you to discharge these debts. The debts that do not get discharged are those that a court has ordered you to pay; these include civil and criminal fines, alimony, child support, restitution, and damages in civil lawsuits. Federal student loans are also not dischargeable in bankruptcy.
The bankruptcy court does not go out of its way to discharge tax debts owed to the IRS; these debts usually remain after bankruptcy, although discharging other debts in bankruptcy can free up funds to pay your overdue tax obligations. Filers may, however, request discharge of tax debts, and the IRS and the bankruptcy court decide on a case-by-case basis how much to forgive. The IRS will not even consider discharging old tax debts (more than three years old) unless you have filed tax returns for any of the years in which you had an income. The moral of the story is that, if you dreaded your 2021 taxes so much that you did not even file a tax return, you should file it now, as well as for any other years for which your tax returns are missing. Things can only get better if you do.
Contact Louis S. Schwartz About Taking Charge of Your Tax Debts
A Philadelphia consumer law attorney can help you take an honest look at your tax debts and other unpaid financial obligations in preparation for filing for bankruptcy. Contact Louis S. Schwartz at CONSUMERLAWPA.com to set up a free, confidential consultation.