| Declaring bankruptcy is the last method that you can | | | | allow you to settle your tax debts in some other |
| use to solve the tax problem. But proper care must be | | | | fashion if they know you are going to declare |
| taken if you are going for this method because if IRS | | | | bankruptcy. |
| finds that you have cheated them then severe actions | | | | There are 5 rules put forward by the bankruptcy code. |
| will be taken against you. So, before choosing this | | | | If the tax debt of the bankruptcy filed person satisfies |
| method, consult a tax relief professional to see if this is | | | | these 5 rules then only his petition will be approved. |
| the best choice for you. | | | | The first rule is regarding the due date for tax return |
| In order to get the tax benefits under the bankruptcy | | | | filing. This date should be at least 3 years ago. The |
| then you must file a petition for bankruptcy in the | | | | second rule is that the return must be filed at least 2 |
| bankruptcy court. Once this petition is filed, a | | | | years before. The third rule deals with the age of the |
| bankruptcy estate will be created. It includes all the | | | | tax assessment and it should be at least 240 days old. |
| assets and properties of the person who files the | | | | Fourth rule says that the tax return must not have |
| bankruptcy petition. In order to create a separate | | | | been completed with the intent of fraud. According to |
| taxable entity the petition must be filed under chapter | | | | the fifth rule the person must not be guilty of tax |
| 11 or chapter 7. These chapters belong to the | | | | evasion. |
| bankruptcy code. The tax benefits to be obtained | | | | If you are are strongly considering bankruptcy as a tax |
| depend on the chapter in which the bankruptcy petition | | | | relief method you should consult with a tax |
| is filed. It is highly advised for a person to use an | | | | professional before doing so. Most of the time, the tax |
| attorney or tax attorney when dealing with bankruptcy. | | | | benefit and savings in money you receive from |
| If the person is forgiven by the bankruptcy court then | | | | bankruptcy are no better than other tax settlement |
| the tax that he had to pay to the IRS will be cleared. | | | | methods that are offered for individuals with severe |
| But, it also does not allow this individual to receive the | | | | financial problems under IRS code. If you settle with |
| normal tax benefit that most taxpayers receive. So, | | | | the IRS, you will be considered to be in good standing |
| you must think twice before filing a bankruptcy petition. | | | | with them and you will receive normal tax treatment in |
| This method should only be used if you have | | | | the future but this is very different with bankruptcy. |
| exhausted all other options. It is likely that the IRS will | | | | |