Bankruptcy allows you an option to use a different set of laws (bankruptcy laws) to resolve your delinquent IRS tax debts. It takes the process out of the hands of the IRS and into the hands of the bankruptcy courts.
Depending on which bankruptcy program you are approved for, you can either completely discharge your IRS debt or make affordable monthly payments.
You can file bankruptcy on IRS debt, but many times when you file bankruptcy on IRS debt the consequences are greater than what you are willing to accept or your IRS debt doesn’t qualify. If that is the case, you will have to resolve your tax debt using one of the programs the IRS offers. You can learn more about how we can help you resolve your delinquent tax debt with either the Offer In Compromise or the Installment Agreement program.
While you can file bankruptcy on IRS debt, bankruptcy is meant to assist with all types of debts, so bankruptcy has a greater scope than just for tax resolution. Since bankruptcy can include other debts outside of your delinquent taxes, this is a solution our program does not support in our software, but we want to make sure you have a general understanding of what bankruptcy entails. After reading about the basic requirements above, if you think you may qualify and you think that bankruptcy would be beneficial, we suggest you contact a bankruptcy attorney in your area to seek advice. If you decide bankruptcy is not for you, then we are here to help you with your tax resolution needs. Read more
Yes, potentially you can file bankruptcy on IRS debt, but it can come at a heavy price. Not only can bankruptcy negatively affect your credit, it can affect your employment as well. Most people are aware that filing bankruptcy can make it hard to finance cars, houses, etc., but did you know that it can also cause you to have to pay substantially higher interest on any financing you are able to obtain, making renting a home or apartment very difficult, and it can affect your work.
If your work requires you to maintain a professional license (Realtors, Loan Officers, Contractors, etc.) or go through a background check, a bankruptcy can make receiving or renewing a license difficult to impossible and it can prevent you from passing a financial background check.
The bankruptcy laws state that you can file bankruptcy on IRS debt. However, the reality is that much of IRS tax debt does not qualify for the bankruptcy programs. With bankruptcy being difficult to qualify for, potentially requiring forfeiture of assets, and able to ruin credit, etc., many individuals who owe on back taxes opt to use other resolution methods. Should you decide bankruptcy is not the right solution for you to resolve your back taxes, this is where we can help you.
To discover how our software can help you resolve you taxes for the least amount possible, we encourage you to review more information on both the Offer In Compromise and the affordable Installment Agreement programs and how our software can help you.
Try our Free Pre-Qualifier and make sure you are a good candidate for our tax resolution program, the Resolution Assistant. It’s FREE and we don’t ask for your credit card, date of birth or social security number. Get started today for Free!
Most delinquent taxpayers will not qualify to abate (reduce or remove) their interest under the abatement program.
Abatement of interest is available only:
In many situations, what Interest Rate Does The IRS Charge is not the most important factor to consider. The simplest way to not to pay interest on your delinquent taxes is to use one of the programs that the IRS offers to resolve your taxes for less the full amount owed. The two most common are the Offer In Compromise and the Installment Agreement program.
Delinquent Taxes Owed: | 22,000 |
Interest: | $2,400 |
Penalties: | $5,000 |
Total Tax Bill: | $29,400 |
Approved Repayment Amount: | $5,500 |
As you can see from this example, the amount of the approved settlement is less the original delinquent tax amount. Not only does the hypothetical taxpayers not have to pay the full amount of the delinquent taxes, but he/she does not have to pay the interest that was charged as well. While technically they did not qualify for an interest abatement, they were still able to settle their back taxes without having to pay any interest.
This is a technique that can potentially work for you. In order to find out if you qualify to use this repayment program, you must apply the IRS’ repayment formulas to your current financial situation. Only after you have completed this step will you be able to understand which repayment program will work best for your specific situation and for how much you will be able to settle your delinquent tax debt.
To find out more on how our program can help you determine your eligibility and repayment amount we encourage to start with our Pre-Qualifier. It’s FREE and we don’t ask for your credit card, date of birth or social security number.