As the tax season gets underway, many Louisiana residents may be thinking about the tax debt they already need to handle. In fact, their tax debt may be so overwhelming that they wonder if there are any major steps they could take to address it. Fortunately, Chapter 7 bankruptcy may be able to help.
Some people may think that discharging tax debt through bankruptcy is not possible, but that is not the case. However, the forgiveness of this type of debt hinges on multiple stipulations. Tax debt is considered a priority debt during bankruptcy, and when filing for Chapter 7, that means that the tax debt will be among the first paid when assets are liquidated. If there are not enough assets to cover the tax debt, it can be discharged if it meets the qualifications.
The tax debt must be connected to a tax return that was due at a minimum of three years ago. The debt must also relate to a return that the individual filed at least two years ago. The taxpayer must have received a tax assessment from the IRS at least 240 days before filing for bankruptcy, which officially states the owed amount. The taxpayer must also have a legitimate tax return and not have committed tax evasion. Lastly, the person filing for bankruptcy must provide evidence that he or she filed tax returns for the last four years.
As Louisiana readers can tell, addressing tax debt in Chapter 7 bankruptcy may be difficult, but it is not necessarily impossible. Of course, it is important for individuals to make sure that they meet all the necessary stipulations. Interested parties can receive help with this and other aspects of bankruptcy from experienced attorneys.