People may be able to discharge tax debt through bankruptcy

This is the time of year when people in Maryland need to file their taxes. There are many people who are likely to receive refunds after they file their taxes and may have some plans for the money they will be receiving or already received. However, there are many other people who will not be receiving a refund and in fact may be required to pay the IRS a significant amount of money. For those who find themselves in this situation, it can be a very stressful time of the year.

People may owe taxes for multiple years as well, so their IRS tax debt may get to the point where people are unsure how they will ever pay it off. People who find themselves in this situation may be able to solve their problem through chapter 7 bankruptcy. Through this process they may be able to discharge their tax debt. However, in order to discharge tax debt, certain requirements must be met first.

One is that only income tax can be discharged. Payroll taxes and penalties cannot be discharged. Second people must have filed valid tax returns for at least the two years prior to filing for bankruptcy. The tax debt must be from at least three years prior to filing for bankruptcy. The debt must have been assessed by the IRS at least 240 days prior to the filing of bankruptcy. People must not have committed tax evasion, which includes many different actions people purposely did to try avoid paying taxes. Finally, people must not have committed any type of tax fraud.

People in Maryland are currently working on their taxes, which can be a stressful time of the year for many people. Some will owe a significant amount of money, which may be simply adding on to past debt. Trying to pay this debt off can be a daunting task, but people may be able to get a fresh start free of tax debt through chapter 7 bankruptcy. It can be a complicated process that needs to be done correctly though. Consulting with experienced attorneys could be beneficial.