Some IRS debts are dischargeable in Bankruptcy

Many lawyers and most accountants do not know that many IRS debts are dischargeable in Bankruptcy.  The reason is very simple.  Most of these professionals have little or no exposure to the Bankruptcy laws beyond knowing that the automatic stay stops creditors and the IRS from collecting and most IRS debts are non-dischargeable.  These two sets of general rules represent what a competent professional knows about these subjects and nothing more.

But, the Bankruptcy code makes a carefully selected range of older IRS debts fully dischargeable in Bankruptcy.  So, in general, if you owe the IRS for a tax year that is older than 3 years old it is worth your while to see a Bankruptcy specialist to determine if the tax may be discharged in a Bankruptcy filing.

This is NOT something that even a specialist can determine off the top of their head.  A tax transcript will have to be pulled and a full history of your tax affairs will need to be discussed.  So, you should expect to pay some fee for this work.  But, knowing if an IRS liability is dischargeable in bankruptcy may significantly affect your view of how you handle your finances and may provide a path to financial freedom that you did not know you would discover.

This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.

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