Can overdue taxes be discharged?

Tax debt is generally not discharged as the result of a bankruptcy filing; most tax debts must be paid in full. But with bankruptcy filings that allow you to create a repayment plan, such as Chapter 11 or Chapter 13, the debt can be restructured to pay the overdue taxes over a longer period.

A smart way to handle overdue taxes in Arizona is by filing Chapter 13 bankruptcy. In the Chapter 13 bankruptcy process, the bankruptcy court determines which of your creditors are repaid, at what amount, and in what order. The tax owed to the IRS takes a priority position in the distribution process, ensuring that the tax will be paid in full. The advantage to you is full repayment spread over 3-5 years with equal payments that fit within your budget.

In addition to easing the repayment burden of a large tax debt, there may be other benefits to handling overdue taxes by filing Chapter 13 bankruptcy. It might be possible to reduce or eliminate the interest and penalties added to the overdue taxes. An experienced bankruptcy attorney can help evaluate the benefits of Chapter 13 bankruptcy in dealing with your back taxes.

If you are faced with an overwhelming tax debt, consult with experienced bankruptcy lawyers to determine if a bankruptcy repayment plan might fit your circumstances. The Frutkin Law Firm, PLC, bankruptcy attorneys can help you navigate the tricky path of back taxes, including the interest and penalties that could be charged. While you probably cannot eliminate your overdue taxes, you can gain a way to repay the debt in a manageable plan.