In the same way that VISA or Mastercard can’t collect during an active bankruptcy filing, the IRS can’t request payment or transfer an account to collections while someone is in bankruptcy. All creditors must patiently wait until the bankruptcy process has been discharged (one of the few times the IRS must wait like the rest of us mere mortals). Back taxes, if old enough, can be handled within the bankruptcy process. On the bright side, depending on your specific case, the IRS and the State may be required to forgive your tax penalties. Depending on the bankruptcy code relevant to your unique situation, the IRS and State may be obligated to discharge your whole prior tax liability. The best way to make sure you get the best deal on your prior tax obligations is to work with a legal team who can advise if you are a good candidate for tax debt reduction post-bankruptcy.
Still have questions about back taxes and bankruptcy? We can help. Give us a call at 623 - 252 - 0742 or send us a note today!