Bankruptcy and Taxes Attorney in Kansas City, Missouri
Can you discharge IRS debt?
Can you discharge IRS debt?
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you have to remember there’s a lot of
different types of taxes customs sales
taxes
things of that nature personal property
taxes real estate taxes things of that
most consumers though don’t deal with
the excise taxes or the sales taxes or
the withholding taxes things like that
the irs debt
they are dischargeable but there’s a
bunch of different rules that apply to
it the first rule being generally that
the tax return that generated the
liability has to have been due for at
least three years uh you count the due
date from the date that the return was
due if it was timely filed and if there
was an extension remember that’ll run to
october 15th 16th or 17th and you look
at three years from that time if the
three-year rule is met
then they’re generally dischargeable
unless you’ve got fraud or something
like that involved if you’ve got a tax
return that was not timely filed
it’s actually kind of odd right now the
10th circuit as well as all of the other
circuits other than the 8th circuit
which is missouri and remember the 10th
circuit is kansas
those
circuits have ruled that if the tax
return is even filed one day late then
it is never dischargeable the eighth
circuit is actually still follows the
rule that even if it was filed late if
the debtor filed the return and the
return has been on file for more than
two years
then of course assuming you don’t have
fraud or something like that then they
are in fact dischargeable but in those
instances you have to look at when the
the tax return was processed by the irs
not the deadline for example if you’re
looking at the three-year rule and
somebody files their tax return in
february it’s considered due um april
15th or 16th 17th however the weekend
falls so that’s the actual due date and
the date you count by not by the date
that the return was filed or processed
but if the return is filed late you have
to cope by the processing date and that
can be several months after it was
actually filed
typically when we have cases like that i
have my clients go out and go you can go
to www.irs.gov
and you can get what are called
transcripts there’s all different types
of transcripts you can get the
transcripts for the w-2s or the tax
return itself but in situations like
that we look for what’s called an
account transcript and the account
transcript it’ll tell how much is owed
penalties interest things like that but
it gives us the dates that are
associated with that return when it was
filed when it was processed whether it
was timely filed if you know how to read
the codes it’ll actually tell you
whether there’s fraud involved things
like that and with those you can pretty
much tell
fairly quickly whether the tax liability
is going to be dischargeable or not
Kansas City, KS bankruptcy attorney Tracy L. Robinson explains how he can help clients discharge IRS debt. He explains that people often forget how many different types of taxes exist—customs taxes, sales taxes, personal property taxes, and real estate taxes, among others. Most consumers, however, don’t typically deal with excise taxes, sales taxes, or withholding taxes.
When it comes to IRS debt, he notes that such debts can be dischargeable, but there are numerous rules that govern this. The first and most basic rule is that the tax return generating the liability must have been due for at least three years. The count begins from the due date of the return—if it’s filed on time. If an extension is granted, that due date usually falls around October 15th, 16th, or 17th, depending on the year. If the three-year rule is met, then the debt is generally dischargeable—unless there’s fraud or similar misconduct involved.
He goes on to explain that if a tax return isn’t filed on time, things become more complicated. Under current law, the Tenth Circuit, along with all other circuits except the Eighth Circuit (which covers Missouri), has ruled that if a return is even one day late, it can never be discharged. The Eighth Circuit, however, still follows the older rule—if the return was filed late but has been on file for more than two years (and no fraud is present), then it can still be dischargeable.
In those cases, he says, it’s crucial to look at when the IRS actually processes the return—not the filing deadline. For example, under the three-year rule, if a taxpayer files in February, the due date is still April 15th (or the 16th or 17th, depending on weekends). That due date—not the filing date—is what starts the three-year clock. But if the return is filed late, the processing date is what matters, and that can be months after filing.
When handling such cases, he typically advises his clients to go to the IRS website and obtain what are known as account transcripts. There are various types of transcripts—W-2 transcripts, tax return transcripts—but the account transcript is the key one. It lists the total amount owed, penalties, and interest, as well as important dates such as when the return was filed and processed. If one knows how to read the IRS codes, the transcript can even reveal whether fraud is involved. With those details, he can usually determine fairly quickly whether the tax liability is dischargeable or not.
