What's New

This is important news for Americans who are having trouble with the IRS. This brief article is going to provide you with information that most attorneys don't know, and the IRS has been trying to hide from the American taxpayers for decades.

Many lawyers and CPA's throughout the country are laboring under the mistaken impression that under no circumstances can income tax debts be discharged through bankruptcy. IRS agents have, of course, been of no help in informing American citizens that they can escape their tyrannical clutches through bankruptcy.

The law which permits elimination of income tax debts through bankruptcy was enacted several decades ago, in 1966. (11 U.S.C. section 507,"Priorities"; and section 523, "Exceptions to Discharge"). Prior to 1966, debts for income taxes were not dischargeable. In 1966 Congress concluded that:

Frequently the non-dischargeability of tax liabilities prevents an honest but unfortunate debtor from making a fresh start unburdened by what may be an overwhelming liability for accumulated taxes, with attendant penalties, and usurious interest. Consistency for the rehabilitory purpose of the Bankruptcy Act, as well as fairness to the individuals, demands some time limit upon the extent of taxes excepted from discharge.

Under the foregoing laws, tax debts can be discharged even where no return was filed, even if fraud was involved, or even if the return was filed late, as long as it was filed two (2) years or more prior to the date of the filing of a bankruptcy petition.

Here are the basic guidlines you may use to assess whether you can expect to discharge IRS tax liabilities in either Chapter 7 or Chapter 13 bankruptcy:

• Did the tax year for which you allegedly owe taxes end more than three years before the date you plan to file a bankruptcy petition?
• Did you properly file your tax return(s) for the year(s) in question at least two (2) years before the date you plan to file a bankruptcy petition?
• Has it been more than 240 days since the IRS assessed any tax against you and the date you plan to file a bankruptcy petition?
• (For owners of real estate) The IRS has NOT recorded a bonafide Notice of Lien with your county recorder or land office.

If you can answer the first three questions above with a yes, you have a good chance of discharging all, or at least the portion of any tax liability that meets the above criteria. The fourth item in the foregoing list only applies to the attachment of real estate by the IRS, and won't apply to you if you don't own any real estate with equity you want to redeem.

We will be here with toll-free telephone support for you throughout the process.

E-Mail us at: American Bankruptcy

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