Can You File Bankruptcy on the IRS?
Filing bankruptcy on federal taxes owed to the Internal Revenue Service (IRS) is possible only in some cases. Before attempting to liquidate tax debt through bankruptcy, it is important to know the applicable regulations.
Other People Are Reading
-
Basics
-
If your IRS tax debt is less than three years old, then it is not within current bankruptcy laws to include it in your case.
Considerations
-
Those who have not filed all of their last three tax returns with the IRS will not be permitted to petition for bankruptcy until the past due paperwork is resolved.
-
Older Taxes
-
If you have taxes from earlier years due to the IRS, then you can usually include them in your personal bankruptcy petition.
Tax Refunds
-
Keep in mind that if you are applying for a Chapter 13 debt reorganization plan, you may be required to surrender your next several tax refunds to offset your creditors' losses.
Warning
-
These rules also usually apply to state and local taxes less than three years old. Failure to pay any owed taxes as required can lead to property liens and wage garnishments.
-
