Understanding Eligibility for Income Tax Relief with Bankruptcy Filing
Does filing for bankruptcy make the tax liability go away? Well, it depends. The objective of bankruptcy is to provide an entity a fresh financial start. When it becomes impossible for you to repay your debts because of a financial setback, you may consider filing bankruptcy. However, remember this is the last option.
Filing for Chapter 7 bankruptcy may provide you some relief from tax liability. However, before you proceed, consult an attorney to understand the tax consequences of the filing, and the applicability of this on your case. If your case fulfills certain conditions, you may be eligible for this relief.
Here is a quick look at the criteria you need to fulfill.
The relief you request for pertains to income taxes
There was no willful tax evasion or fraud on your part
The period between the date of filing the tax return for the debt you want to discharge and the date of filing bankruptcy is 2 years (minimum)
The tax debt is due for 3 years (minimum) before the bankruptcy filing
The Internal Revenue Service (IRS) is yet to assess the debt or has assessed it within 240 days prior to your filing
Get help from a Maryland Bankruptcy Attorney to understand the legal approach to the matter. Only he/she can help you assess the situation and take the right step towards resolving your problem.