For those struggling under a mountain of debt, IRS harassment over past-due taxes can be overwhelming. If a person doesn’t know how to deal with overdue taxes, it may help to talk to a Chapter 13 Bankruptcy Lawyers in St. Louis County MO. With a lawyer’s help, a client can regain his or her financial footing. Below is an explanation of how filing for Chapter 13 bankruptcy can limit IRS hardships for clients, and some information on how an attorney can stop IRS harassment.
Non-Priority and Priority Tax Debt
During a Chapter 13 case, debts are classified according to their priority status. A priority debt must be fully paid as part of a Chapter 13 repayment plan that’s prepared with an attorney’s help. Some non-priority debts may be eliminated as part of the bankruptcy filing process.
The Priority Status of Tax Debt
Certain tax debts may be given non-priority status if they meet the below criteria.
- The debt must arise from unpaid income taxes.
- The return was due three years and filed two years before Chapter 13 proceedings were initiated. If a person files a return late, it can affect their ability to discharge tax debt. Late returns should be discussed with a chapter 13 bankruptcy lawyers in St. Louis County MO, as time limits apply.
- The client didn’t intentionally evade taxes. If the person committed tax fraud or evasion, they might lose the ability to get a discharge under Chapter 13.
Priority Debts
Chapter 13 offers certain benefits even for those who have priority debts. As with other, similar debts, Chapter 13 cases include plans to eliminate tax debt over at least five years. Once the plan is approved, the IRS can’t harass the client as long as they follow its terms and make timely payments.
If a person is considering using Chapter 13 bankruptcy as a way to consolidate debts or stop harassment from the Internal Revenue Service, they can get legal advice from a local bankruptcy lawyer. Click here to get in touch with an experienced attorney who can provide advice and advocacy during the bankruptcy process.
