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what happens if you file bankrupcy and you have not paid taxes?


ibreathein
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i plan on starting to pay taxes this coming year, after 5 years of non payment. but i need to file bankrupsy. i thought that i might be able to afford the settlement offers im getting but ohio is in the works of passing a law that makes it nearly impossible to continue in my job and i wont be able to afford the settlement if it passes.

i have untill the 29th to make my first payment on the settlement before it goes to a collections attorney.

if i file bankrupsy now or even after i pay taxes for the first time will that hurt my chances with no tax records or worse yet is that an automatic audit?

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If I understand your question, your taxes will not be dismissed with the BK...government always their...err your money. I don't know what to tell you about the possibility of losing your job, but I wouldn't not pay because you might lose your job.

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Actually, I think what she is saying is she has been working "off the books" and therefore has never paid taxes. She has her debt, was set to settle and now she has to find a new job so won't be able to do the settlements she was arranging.

Am I right?

Either way, I would talk to my lawyer about what might be the best way to go.

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Were you working, collecting a paycheck, having taxes taken out every week and just didn't file your returns for 5 years?

Or were you working, being paid in cash, off the books and didn't pay any taxes throughout the years?

I filed CH 7 in 2005 (in CT), hadn't done a tax return since 2001 and was still able to file BK. I actually didn't catch up on my tax returns until this past April. Unfortunately, after 3 years you lose any refund due to you. And if you owe the IRS, fees and penalties add up and the debt doesn't go away.

Anyway, point is...my not having filed tax returns did not affect my ability to file CH 7.

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While tax returns are normally part of the required documents for the Trustee, if you haven't filed taxes, then there's no way you can cough up returns that don't exist. However, it's possible you will be required by the Trustee to actually file the returns if your income was enough to require filing.

You cannot be relieved of taxes due for the past 5 years. The taxes are ONLY dischargeable IF you actually FILED the returns and the tax has been due for 3 years or more. Since you never filed returns, the taxes will NOT be discharged.

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You cannot be relieved of taxes due for the past 5 years. The taxes are ONLY dischargeable IF you actually FILED the returns and the tax has been due for 3 years or more. Since you never filed returns, the taxes will NOT be discharged.

I'm not sure the 5 year part is right... This is what I've been finding everywhere..

"Chapter 7 Bankruptcy will eliminate all income taxes except the following tax liability:

a. Taxes for which a tax return was due to be filed within three years (plus extensions) prior to the date of filing bankruptcy. For example, the tax return for 2003 income taxes was due to be filed on April 15, 2004 (plus any extensions), and therefore, these income taxes cannot be discharged by filing bankruptcy on or before April 15, 2007 (plus the time of extensions); OR

b. Taxes assessed by the IRS within 240 days before the filing of bankruptcy. Assessment date is the date that tax liability is entered on IRS records; OR

c. Taxes not yet assessed but still assessable; OR

d. Taxes for which a tax return was filed late and filed within two years prior to filing bankruptcy; OR

e. Taxes of a debtor who committed fraud related to a tax return or willfully attempted to evade or defeat taxes sought to be discharged.

Income taxes that do not fail any of the above five tests may be wiped out in a Chapter 7 Bankruptcy.

Tax Relief in a Chapter 13 Bankruptcy

Taxes which are non-dischargeable in Chapter 13 are considered priority debts and must be paid in full during the Chapter 13 plan without interest."

Regardless, if she's going to up and file everything now, nothing will be discharged as the filing took place within the last two years.

That being said though, the IRS is a "good" creditor in that you always have options, as long as you keep in touch with them. Whatever you do, DO NOT ignore them. You can mess with a CA up and down, but not with the IRS. They're like Jason from Friday the 13th, no matter how fast you run through the woods, they'll eventually catch up to you with their slow and steady lumber...!

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