- Knowing the rules of tax discharge in bankruptcy gives an attorney an advantage when negotiating with the IRS.
- One of the criteria in the IRS employee manual when considering an OIC is “To Determine What The Effects Of Bankruptcy Would Be In Analyzing The Settlement Potential.”
- Numerous OIC’s Have Settled solely on the Threat of Bankruptcy.
REQUIREMENTS TO DISCHARGE TAXES IN CHAPTER 7
TAX MUST BE OVER 3 YEARS OLD FROM WHEN THE RETURN FIRST CAME DUE.
TRAP: Make sure the client did not file a REQUEST FOR EXTENSION.
TWO YEARS SINCE THE TAX RETURN WAS FILED.
TRAP: If the IRS filed a “substitute for Return” (SFR)
This does NOT constitute the filing of a return and te taxes will not be discharged.
240 DAYS SINCE THE TAX WAS ASSESSED.
When a return is filed, the IRS assesses the tax within a short time. (could be days or months)
- IF THE IRS WAS PREVENTED FROM COLLECTION BY A REQUEST FOR A HEARING OR APPEAL, THEN THE TIME PERIODS ARE EXTENDED BY THAT TIME, PLUS 90 DAYS.
- IF AN OIC WAS FILED, THE TIME OF THE OIC, PLUS 30 DAYS.
- ANY PERIOD OF A BANKRUPTCY STAY, PLUS 90 DAYS.