One of the biggest concerns surrounding any bankruptcy case is this – what happens to the tax debt? Is it possible to eliminate the tax debt owed to the IRS and other taxing agencies when you file for bankruptcy? Although there are certain debts that cannot be discharged, such as child support payments, it is possible to eliminate your tax debt when filing for bankruptcy.

Discharging Tax Debt

You may be able to have your tax debt discharged if all of the following circumstances are met:

• It has been more than 3 years since the returns were last DUE to be filed
• The returns were timely filed or it has been at least 2 years since the returns were filed
• There was no tax fraud involved or attempts to evade the tax
• The taxes were not assessed within the last 240 days

These are the minimum requirements for discharging any federal or state income taxes. Keep in mind that every single circumstance is different, however, and you may or may not qualify for a tax debt discharge.

Chapter 7 and Chapter 11 Tax Debt Discharge

Discharging tax debt will only work under Chapter 7 bankruptcy. Under Chapter 11 or Chapter 13 bankruptcy, the debt will be reorganized into a more favorable payment plan that you will be able to manage. However, all three options may work in your situation. You will need to determine whether you want your assets liquidated or if you would prefer to keep your assets and simply restructure your debts into a more manageable payment plan.

Handling Tax Debt

Knowing that you owe the IRS or other taxing agencies, such as the State Franchise Tax Board, the Employment Development Department and the Board of Equalization, can be a daunting thing to deal with day in and day out. It can be hard to focus on the simple pleasures in life having this looming debt always on the back of your mind. If you are currently struggling with tax debt, it will be worth your while to look into bankruptcy as a solution.

How We Can Help

Understanding and abiding by the United States tax system is tricky to say the least. It will be made even more difficult if contemplating bankruptcy. Make sure you get the legal advice you deserve during this confusing time.

To schedule a free consultation to discuss bankruptcy with one of our Minneapolis area bankruptcy attorneys, please contact Heimerl, & Lammers, LLC.

Heimerl & Lammers practices in all eighty seven counties of Minnesota including, Hennepin County, Ramsey County, Scott County, Carver County, Washington County, Anoka County, Wright County, Sherburne County, Chisago County, Isanti County, Stearns County, Dakota County, Cass County, Blue Earth County, Olmsted County, Sibley County and St. Louis County.

We represent Minnesota Bankruptcy Law clients throughout the Twin Cities including Minneapolis, Champlin, Brooklyn Park, Brooklyn Center, Eden Prairie, Edina, Excelsior, Hopkins, Long Lake, Lino Lakes, Maple Plain, Minnetonka, Monticello, Mound, Osseo, Otsego, Rogers, Saint Bonifacius, Saint Paul, St Paul, Spring Park, St Louis Park, Wayzata, Woodbury, White Bear Lake, Plymouth, Maple Grove, Eagan, Eden Prairie, Burnsville, Bloomington, Buffalo and throughout Minnesota.

Disclaimer: We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.