How can I get rid of my back taxes and where do I start? 8 Answers as of May 07, 2015

I owe about 12 years of back taxes to the IRS. Will they be able to take my wages if I get a job again? Will it help if I file for bankruptcy or will they still have a way to make me pay? How can I stop the penalties and interest?

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Ronald K. Nims LLC | Ronald K. Nims
First, if you filed the returns then any taxes more than 10 years old are written off by the IRS (that's why the TV ads say "we can get a deal where you pay 5% of your back taxes" the IRS has already written off the old years). Second, taxes where you filed the returns more than 3 years ago are discharged in bankruptcy. So, if you filed bankruptcy you'd still have to pay 2012, 2013 and 2014 taxes but not the older ones. You could handle these through in bankruptcy court in a Chapter 13 or directly with the IRS in a Chapter 7. Many bankruptcy attorneys don't have a clue about taxes, go to an attorney who is also a CPA.
Answer Applies to: Ohio
Replied: 5/7/2015
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
In my opinion you should seek help from a knowledgeable local attorney. They can evaluate your individual situation and go into more detail with you. Here are the rules in simple terms: Generally, unsecured income taxes that were first due more than three years before the bankruptcy is filed can be discharged in full in any chapter of bankruptcy if a timely and non-fraudulent return was filed. *Priority taxes* Taxes first due within three years of the bankruptcy and taxes assessed within 240 days of the bankruptcy, or which are unassessed but assessable when the case is filed, are priority claims which are not subject to discharge. Priority taxes will survive a Chapter 7 discharge to the extent that the trustee does not have money in the estate to pay them. In Chapter 13, such taxes must be paid in full through the plan; penalties associated with those taxes, however, can be treated as a non-priority claim and paid a fraction along with other unsecured claims. In Chapter 13, the tax does not continue to incur interest during the case; if the plan is completed, no post filing interest is due. Taxes for which no return has been filed are not dischargeable in bankruptcy. If a return was filed late, for a year outside of the priority tax period, the return must have been on file for two years for the tax to be discharged in bankruptcy. *Five Rules to Discharge Tax Debts* If the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions. 1. The due date for filing a tax return is at least three years ago. 2. The tax return was filed at least two years ago. 3. The tax assessment is at least 240 days old. 4. The tax return was not fraudulent. 5. The taxpayer is not guilty of tax evasion. *Return Due At Least Three Years Ago* The tax debt must be related to a tax return that was due at least three years before the taxpayer files for bankruptcy. The due date includes any extensions. *Return Filed At Least Two Years Ago* The tax debt must be related to a tax return that was filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date the taxpayer actually filed the return. *Tax Assessment At Least 240 Days Old* The IRS must assess the tax at least 240 days before the taxpayer files for bankruptcy. The IRS assessment may arise from a self-reported balance due, an IRS final determination in an audit, or an IRS proposed assessment which has become final. *Tax Return was Not Fraudulent* The tax return cannot be fraudulent or frivolous. *Taxpayer Not Guilty of Tax Evasion* The taxpayer cannot be guilty of any intentional act of evading the tax laws. *Some Tax Debts Not Dischargeable* Tax debts that arise from unfiled tax returns are not dischargeable. The IRS routinely assesses tax on unfiled returns. These tax liabilities cannot be discharged unless the taxpayer files a tax return for the year in question. *Other Tax Issues in Bankruptcy* Before a Chapter 7 or Chapter 13 bankruptcy can be granted, the bankruptcy petitioner is required to prove that the four previous tax returns have been filed with the IRS. The four previous tax returns must be filed no later than the date of the first creditors' meeting in a bankruptcy case. Additionally, bankruptcy petitioners are required to provide a copy of their most recent tax return to the bankruptcy court. Creditors can also request a copy of the tax return, and petitioners must provide a copy to them.
Answer Applies to: California
Replied: 5/6/2015
Robert E. Giffin | Robert E. Giffin CPA
Offer in Compromise ( use a CPA or Attorney ) who has done 6 OIC in the last year, arrange an installment agreement, find out what taxes are uncorrectable by the IRS Statue of Limitations, or chap 13 or chap 7 Bankruptcy.
Answer Applies to: Ohio
Replied: 5/6/2015
Musilli Brennan Associates PLLC
Musilli Brennan Associates PLLC | John F Brennan
You should most certainly see an attorney prior to filing a bankruptcy. Sometimes taxes are dischargeable, but more commonly they are not. There other ways to deal with past-due taxes which should be explored if that is your major debt.
Answer Applies to: Michigan
Replied: 5/5/2015
James Oberholtzer, Attorney at Law
James Oberholtzer, Attorney at Law | James Oberholtzer
The statute of limitations is typically 10 years after accurate complete returns are filed. If you have not filed the returns, the statute never begins to rub and you cannot bankrupt out of the taxes.
Answer Applies to: Oregon
Replied: 5/5/2015
    Mankus & Marchan, LTD
    Mankus & Marchan, LTD | Tony Mankus
    Contact a good tax lawyer.
    Answer Applies to: Illinois
    Replied: 5/5/2015
    Irsfeld, Irsfeld & Younger LLP | Norman H. Green
    Will they be able to take my wages if I get a job again? Yes, but only a portion Will it help if I file for bankruptcy or will they still have a way to make me pay? Taxes are not discharged in bankruptcy, so it won't help much. How can I stop the penalties and interest? Pay. Consider an installment agreement with the IRS. Have you filed the returns and owe, or have you simply not filed?
    Answer Applies to: California
    Replied: 5/5/2015
    Andrew Gordon
    Andrew Gordon | Andrew Gordon
    If you do not do anything, the IRS can garnish your wages. If you file for bankruptcy you will likely still have years that are outside the bankruptcy (generally the last 3 years of tax debts are not discharged). I would suggest contacting a tax attorney to help you explore your options. My firm has helped many taxpayers settle their debt and get on the right foot.
    Answer Applies to: Illinois
    Replied: 5/5/2015
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