There is no escaping your legal obligation to pay your taxes. You may want nothing more but to fulfill this responsibility as an upstanding United States citizen. But understandably so, you may be overwhelmed with all your other debts that you put your tax debts on the back burner, so to speak. This is what may have driven you to declare bankruptcy in the first place. Follow along to find out whether a bankruptcy filing can clear tax debt and how a proficient Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you find the financial relief you are looking for.
Can a bankruptcy filing clear my tax debt?
The short answer is that, yes, tax debt may only be cleared through your bankruptcy filing if it meets certain criteria. Such criteria read as follows:
- The tax debt may be specifically federal and/or state income tax debt.
- The tax debt must not be from willfully evading paying your taxes or filing a fraudulent return.
- The tax debt must have been due at least three years before your bankruptcy filing date.
- The tax debt must have an associated tax return filed at least two years before your bankruptcy filing date.
- The tax debt must have been assessed by the Internal Revenue Service (IRS) at least 240 days before your bankruptcy filing date.
Can bankruptcy clear a tax lien?
You must understand that tax debt is different from a tax lien. To reiterate, tax debt is specifically the money you owe to the IRS and/or New York State. So in your bankruptcy filing, the New York State bankruptcy court may bar the IRS or state authorities from pursuing further collection activities for your owed money, such as garnishing your wages. Then, the court may eliminate your financial responsibility to pay it off altogether.
On the other hand, a tax lien is a legal judgment against your property to satisfy a due tax obligation. In other words, this involves a creditor placing a claim against your property to give themself the authority to sell it if you cannot and do not pay them back. Unfortunately, in your bankruptcy filing, the court may not lift any prior tax liens against your property. This is because once an IRS or state authority tax lien is filed and recorded, it becomes a secured financial obligation in your bankruptcy proceedings. Meaning that if you wish to sell your property in the future, you must pay off its tax lien first.
If you are struggling with tax debt, tax liens, or both, what you need the most is likely strong legal representation from a talented Rockland County bankruptcy attorney. Someone at The Law Offices of Allen A. Kolber, Esq. is looking forward to your phone call.
