CAN I FILE BANKRUPTCY ON TAX DEBT?

I owe money to the IRS for self-employment taxes for several years. I heard that under the new bankruptcy laws, I cannot file bankruptcy on tax debt. Is that true?

No, that is not true. There is still a variety of relief available for tax debt under the new bankruptcy laws enacted in 2005. It is a common problem for self-employed individuals or individuals running a business to have tax liability issues with the IRS, the State Comptroller, and the local property taxing authorities. IRS problems could include non-payment of personal income taxes, and 940 and 941 taxes including interest and penalties. Other tax issues could involve state sales taxes and local property or business personal property taxes.

The relief available to you in bankruptcy will strictly depend upon your circumstances. You need to consult with an attorney experienced in handling taxing authorities. The first questions I will ask you in a consultation about IRS debt are: have you filed your tax returns that are due, when did you file them, and are there any IRS liens on your property? Some taxes can be eliminated or reorganized in bankruptcy. In addition, bankruptcy may provide relief on interest and penalties.

Bankruptcy can be a useful tool in helping your business to survive in a difficult economy. Please call my office for an appointment to discuss your options in managing your tax debt.