Publication Contents Introduction Cat No S Department Individuals in chapter or of the Treasury Individuals in chapter or Responsibilities of the Individual Bankruptcy Internal Debtor Revenue The Bankruptcy Estate Service Tax Guide Partnerships and Corporations Partnerships Corporations Tax Procedures Determination of Tax Payment of Tax Claim Debt Cancellation Exclusions Tax Attribute Reduction Example Partnerships Corporations Tax Attribute Reduction Example How to Get More Information Index Introduction This publication covers the federal income tax aspects of bankruptcy Bankruptcy proceed ings begin with the filing of a petition with the bankruptcy court The filing of the petition cre ates a bankruptcy estate which generally con sists of all the assets of the person filing the bankruptcy petition A separate taxable entity is created if the bankruptcy petition is filed by an individual under chapter or chapter of the Bankruptcy Code These chapters are ex plained later The tax obligations of taxable es tates are discussed later under The Bank ruptcy Estate The tax obligations of the person filing a bankruptcy petition vary depend ing on the bankruptcy chapter under which the petition was filed For individuals these are also explained in the first part of this publica tion For other entities

Each year the IRS settles BILLIONS in back taxes You CAN bankrupt against the IRS You must use caution when considering whether bankruptcy will eliminate tax debt Even when bankruptcy can help most clients want to avoid bankruptcy if possible While certain tax debts are eliminated by bankruptcy NOT all tax debts can be eliminated An is often a much better alternative than bankruptcy and the Offer can erase ALL your tax debts even if bankruptcy won't If you qualify for bankruptcy you probably qualify for an Offer in Compromise If you are considering bankruptcy because of federal taxes you should carefully examine all your other options first options which can stop the IRS Why ruin your credit more than you have to? If you have taxes which could be eliminated by bankruptcy the IRS must take that into consideration when you submit an With the IRS' new Offer in Compromise rules bankruptcy should only be used when there is no other alternative available Jeff Fouts can direct you to the most beneficial settlement with the US Internal Revenue Service Any compromise with the IRS will be in your best intrest * * copy Copyright Client Owed Settled for

You are here Tax Debt Tips from About com Bankruptcy information from around the Web Suggested Reading from the US Bankruptcy Courts Related Blogs Most Popular Bankruptcy and Tax DebtsFrom Your Guide to FREE Newsletter Five Rules for Discharging Tax Debts in BankruptcyIncome tax debts may be eligible for discharge under Chapter or Chapter of the Bankruptcy Code Filing for bankruptcy is one of but you should consider bankruptcy only if you meet the requirements for discharging your taxes Chapter provides for full discharge of allowable debts Chapter provides a payment plan to repay some debts with the remainder of debts discharged Under the new bankruptcy laws tax debts are treated the same way in both Chapter and Chapter petitions Not all tax debts are capable of being discharged in bankruptcy The bankruptcy petitioner must have tax debts that meet five criteria for discharge Tax debts are associated with a particular tax return and tax year The bankruptcy law lays out specific criteria for how old a tax debt should be 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 and Chapter bankruptcy

Bankruptcy in Brief a service of the Moran Law Group Tax FAQ's What if I can't pay non dischargeable tax debt even over a five year Chapter plan? Consider an offer in compromise to the IRS The IRS can negotiate with taxpayers to compromise tax claims based on either doubtful liability or doubtful collection The IRS generally expects you to pay to them whatever income is excess in their view of what it should cost you to live for months or the remainder of the collection statute whichever is less More on by a tax practitioner and the Check out the IRS standards for allowable and used in evaluating offers Currently the IRS is under mandate to alter its policy that it wouldn't consider an offer in compromise while a bankruptcy is pending How this will develop is an ongoing saga Are there tax consequences if my property is foreclosed? Foreclosure can trigger tax consequences to you depending on the tax basis of the property whether the property is your residence etc Know that the in a Chapter and is a separate tax paying entity distinct from the individual debtor if the property is when the foreclosure takes place

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