Will Bankruptcy Solve My Tax Problems?This answer should come from a licensed bankruptcy attorney. Some income tax debts may be dismissed with your bankruptcy plan, depending on the age of the assessed tax. Other tax debts, such as a Trust Fund Recovery Penalty liability, may not be dismissed in bankruptcy. If you are currently in bankruptcy, you are not eligible to resolve your tax debt via IRS programs; your tax must be resolved within the context of your bankruptcy.
Before filing for bankruptcy, you may want to determine your tax debt resolution options with the IRS, especially if your tax debt is the main reason you are considering bankruptcy as an alternative. Bankruptcy can be very expensive relative to the IRS programs that may be available to you. You may be eligible for the following IRS tax debt resolution programs:
- Monthly Payment Plan or Installment Agreement, including Partial Payment Installment Agreement;
- Offer in Compromise;
- Penalty Abatement or Removal
- Currently Not Collectible or Uncollectible or Status 53.