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If you have received a certified letter from the IRS saying you owe taxes, you have 30 days to respond. If you do not respond, the IRS can place a tax lien or wage garnishment.
Some tax debts are dischargeable (eliminated) in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy but only if all of the following conditions are met:
1. The Taxes owed are Income Taxes
2. The Taxes owed are due at least 3 years before your filed Bankruptcy
3. You Filed the Taxes at least 2 years before your filed Bankruptcy
4. Your Tax Debt was Assessed by the IRS at least 240 days before your filed Bankruptcy
5. You did not Commit Fraud or Willful Evasion.
This rule applies to IRS Tax Debt and Franchise Tax Board Tax Debt.
If your tax debt is not dischargeable, you can avoid an IRS Tax Levy or Wage Garnishment by either reach an agreement with the IRS or file a Chapter 13 Bankruptcy payment plan to pay-off the tax debt. You can stop the tax interests and penalties when you are making the tax repayment through Chapter 13 Bankruptcy.
Even if your tax debt is dischargeable through Chapter 7 Bankruptcy, Chapter 7 Bankruptcy will not remove Tax Liens that are recorded against you. If your tax debt is discharged in Chapter 7 Bankruptcy, it means that the IRS cannot take money from your bank account or garnish your wages. But if there is a recorded Tax Lien, you must payoff the Tax Lien if you want to sell your real estate. However, a Chapter 13 Bankruptcy might be able to reduce or remove the IRS Tax Lien or Franchise Tax Board Tax Lien.
Any information on this website is not meant as a substitute for a consultation with a Bankruptcy Attorney because all cases are unique. Bankruptcy law and tax law can change and are very complex to be fully covered in a website. Muoi Chea is an experienced Bankruptcy Attorney with Offices in Sacramento, Stockton, and Fairfield California to provide debt relief through Chapter 7 and 13 Bankruptcy filing for residents throughout Northern and Central California.
Some tax debts cannot be discharged in bankruptcy, such as self-employment tax and payroll tax. Call to schedule a consultation with Muoi Chea Bankruptcy Attorney for other tax liabilities that are not dischargeable in bankruptcy.
Click on the Links below for more topics on Tax Debts:
Can Bankruptcy Eliminates Tax Penalties?
Chapter 13 vs. Chapter 7 Bankruptcy in Dealing with Tax Debts
How can Chapter 13 Bankruptcy provide relief from Tax Debt Liability?
How are Payroll Tax, aka Trust Fund, Excise Tax and Sales Tax Treated in Bankruptcy?
Is IRS Offset of Tax Refund a Violation of Automatic Stay?
Beware of IRS Scam Phone Calls about Tax Debt
Does Bankruptcy Discharge Remove Tax Lien? It Depends.
Do I have to Pay Interest on IRS Debt Paid through Chapter 13 Bankruptcy Plan?