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What to Do if You Have Unfiled Taxes


The filing date for federal and state income tax for 2019 got pushed back to July 15, 2020. But many people did not submit their taxes on that date, and they might even have unfiled taxes from previous years.

If you are considering bankruptcy, then your attorney needs to understand your tax situation. It is often possible to stop collection on unpaid taxes and to even eliminate some taxes, but we need to figure out how much you owe. Contact a South Florida bankruptcy attorney for more information.

Why You Should Prepare, but Not File, Your Tax Returns

Before meeting with a bankruptcy attorney, it is helpful to prepare tax returns for any years you have failed to file. This information will help your lawyer understand any tax liability that you have and develop strategies for minimizing or eliminating it. Gather all relevant supporting documentation, such as proof of self-employment income, and store it with your returns.

Of course, preparing the tax returns is one thing, filing is another. Once you file, you are on the hook for whatever you owe, so we encourage you to hold off on filing until you meet with a bankruptcy attorney. Your attorney might have advice about what debts to pay first, or whether you should even submit payment with the tax return.

How Bankruptcy Can Help

Filing for bankruptcy is a good way to stop any tax collection already underway, including garnishments and installment plans. Once you file, an automatic stay is entered, which halts collection efforts until the completion of your bankruptcy.

In some situations, you might be able to eliminate (discharge) income tax obligations. This means you might be able to wipe out certain tax obligations that you are currently paying. However, the debts must meet specific conditions, such as:

  • The debt needs to be at least three years old.
  • The IRS must have assessed the debt 240 days (or more) before filing for bankruptcy.
  • The tax must be for income taxes, not payroll or other taxes.
  • You must have filed a return for the year in which you owe taxes that you want to discharge. In fact, you must have filed at least two years prior.
  • You cannot have committed tax fraud or willful tax evasion.

Remember, that bankruptcy can eliminate a debt, but it cannot remove a tax lien. If the IRS already put a lien on your home or other property, then bankruptcy will not remove it.

When meeting with an attorney, you can go over this information to determine whether you qualify for a discharge. As you can see, you cannot discharge income taxes owed for a tax year where you didn’t file a return. However, you might have older tax debts you are paying which you might be able to discharge. Even if you don’t, the automatic stay can give you time to save money and go over your options.

Contact Nowack & Olson, PLLC

Our Plantation bankruptcy attorneys at Nowack & Olson, PLLC have helped more than 20,000 debtors find a fresh start. Contact us today to schedule a free, confidential consultation.




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