Bankruptcy may provide relief from certain debts, but it does not always eliminate every federal or state tax obligation. After bankruptcy, it is important to determine which tax balances remain, whether required returns have been filed, and what steps you need to take next.
My Tax Resolution Experts helps individuals review their post-bankruptcy tax position and build a practical strategy for moving forward.
What Happens to Tax Debt After Bankruptcy?
Some tax debts may qualify for discharge, while others may remain collectible. The result can depend on several factors, including:
• The type of tax owed • When the return was originally due • When the return was filed • When the tax was assessed • Whether fraud or tax evasion was alleged • The type of bankruptcy filed
Bankruptcy may temporarily pause certain collection actions, but remaining tax debt may still need to be addressed after the case ends.
• Review IRS account transcripts • Identify remaining tax balances • Determine whether required returns are missing • Review IRS notices received after bankruptcy • Address penalties and interest • Explore payment and resolution options • Adjust future withholding or estimated payments • Create a plan to avoid new tax debt
Tax and bankruptcy laws can overlap in complicated ways. My Tax Resolution Experts provides tax and accounting assistance but does not replace legal advice from a qualified bankruptcy attorney. When necessary, we can work with your attorney to address the tax side of your case.
Move Forward With a Clear Plan
Learn more about John F. McCaffrey, CPA and his experience helping taxpayers resolve serious financial and IRS matters.
