Taxes and Bankruptcy
Tax debt can create serious financial pressure, especially when interest and penalties continue to grow. For some taxpayers, bankruptcy may provide relief from certain tax obligations. However, not every tax debt qualifies, and the rules surrounding taxes and bankruptcy are complex.
Golden State Tax Relief helps individuals and business owners in Los Angeles understand how bankruptcy may affect their IRS or California tax debt. We review your tax history, filing dates, assessment dates, and current collection activity to help determine which options may be available.
Can Tax Debt Be Discharged in Bankruptcy?
Some older income tax debts may be eligible for discharge through bankruptcy. Eligibility often depends on several factors, including:
• The type of tax owed
• When the tax return was due
• When the return was filed
• When the tax was assessed
• Whether fraud or tax evasion was involved
• The type of bankruptcy being considered
Payroll taxes, trust fund taxes, tax liens, and recently assessed tax debts are often treated differently and may not be dischargeable.
Bankruptcy and IRS Collection Actions
Filing for bankruptcy may temporarily stop certain collection actions through the automatic stay. However, this does not always eliminate the underlying tax debt. Tax liens may also remain attached to property even when personal liability for a tax debt is discharged.
Before making a decision, it is important to understand how bankruptcy may affect:
• IRS levies and wage garnishments
• Federal and state tax liens
• Installment agreements
• Future tax refunds
• Business tax obligations
• Personal assets and property
Explore Your Tax Relief Options
Bankruptcy is only one possible solution. Depending on your financial circumstances, you may also qualify for an Offer in Compromise, installment agreement, penalty relief, or Currently Not Collectible status.
Golden State Tax Relief can review your situation and explain the available paths forward. Our team works with taxpayers throughout Los Angeles and surrounding communities to address serious tax problems and reduce the stress of dealing with tax collection agencies.
Reach out to Golden State Tax Relief today to schedule a confidential consultation.
