Can the IRS be Included in Bankruptcy?
Can the IRS be included in bankruptcy? Make no mistake about it – when Uncle Sam wants his tax money, he is going to get it…even if it takes awhile.
You cannot skip out on the money that you owe to the government even if you declare bankruptcy…for the most part. If you want to get rid of your IRS debt during bankruptcy you must: have tax debt from at least three years ago (recent tax debt will not be included); you must have filed taxes every year that you were in business; and your tax debt cannot be the result of a fraudulent return. So, can the IRS be included in bankruptcy? Sometimes they can be (if you fit into the categories mentioned above), but other times they will just sit there and wait…
If you can’t get the IRS involved in your filing, you will not have to pay any of your creditors (including Uncle Sam) until your bankruptcy has ended. However, once that term is over your tax debt will be waiting. As far as any possible tax returns go, you cannot collect those while you are under bankruptcy protection…any returns that you qualify for will go towards paying off that tax debt. One more thing…any interest and penalties will continue to add to your debt while you are under bankruptcy protection. This means that when you are out of bankruptcy, you will still have to face Uncle Sam.
Now that you know the answer to the original question (can the IRS be included in bankruptcy?) you have some thinking to do. No matter how you slice it the government will get their money one way or another. Unless you fall into those very slim categories listed above, you really cannot erase tax debt with one fell swoop. Try as you might, if you owe the government any amount of money it is best to keep them outside of your filing and simply try to pay it off.
Then again, the advice contained within this article is not meant to be legal advice in any shape or form. In order to find out whether or not you can dodge Uncle Sam you will need to speak with a bankruptcy lawyer. If anyone knows how to include those taxes in your filing it is a qualified lawyer.
Can the IRS be included in bankruptcy? Well, it’s a possibility, though only a lawyer will be able to answer this question definitively.