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How does the Bankruptcy Code affect IRS tax obligations?
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| It is a common misconception that
IRS
tax obligations can never
be discharged in a bankruptcy. If there is tax fraud involved, a tax return was not filed, or
the tax was not listed as a liability in the bankruptcy filing, then the tax cannot be
discharged in bankruptcy. However, if there was no tax fraud involved and the tax return was
filed then there is a point in time when IRS tax can be discharged in bankruptcy and
when the IRS can no longer commence tax collection proceedings. As a result of Bankruptcy
Code Sections 523 and 527, the following IRS tax is generally dischargeable:
 | Tax penalties for nonfiling,
tax penalties for late payment, tax penalties for late deposit, and
tax penalties for late estimated payments;
and |
| Income tax, excise
tax, and gift
tax which is over three years old, has been filed at least
two years prior to the bankruptcy petition, and/or has been assessed as
an IRS tax audit
deficiency for at least 240 days. |
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Related tax
information on the Bankruptcy Code & IRS tax obligations |
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How to avoid an IRS audit?
How to prepare for an IRS audit?
What are my appeal rights?
What are the tax penalties and interest? Can they be
avoided?
How does the Statute of Limitations affect income tax
obligations?
How does the Bankruptcy Code affect income tax obligations?
Taxpayer Bill of Rights
Tax Audits, Tax Collections and trouble with the IRS |
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IRS publications about
the Bankruptcy Code and IRS tax obligations:
For further information about the Bankruptcy Code see IRS Publication 908, Bankruptcy
Tax Guide. For further information on the appeals process, refer to Tax
Topic 151, Your Appeal Rights. Also see IRS Publication 1,Your Rights as a
Taxpayer, IRS Publication 5, Appeal
Rights, IRS Publication 556, Examination
of Returns, Appeal Rights.., and IRS Publication 17, Your Federal
Income Tax. |
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IRS Links:
IRS
Appeals
IRS Problem
Resolution Office
IRS
Taxpayer Advocate |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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