For Georgia residents and others, 2023 has been a turbulent fiscal year. You might be one of millions of people across the country who have endured serious health problems, loss of income or other financial crises in the past several years. You might also be among those who are seeking debt relief options like bankruptcy. This is a valuable financial tool that can help wipe the slate clean so that you can start afresh, even when you’re dealing with out-of-control credit card debt or back taxes.
Back taxes typically refer to income tax that you have owed federal or state governments for a year or more. The Internal Revenue Service (IRS) is, in fact, the largest debt collection agency in the world. However, if you can meet the criteria, then filing for Chapter 7 bankruptcy might be a way to get the IRS off your back so that you can alleviate debt and get your finances back on track.
Notice of past-due taxes before bankruptcy
If you’ve been receiving letters from the IRS every few months regarding unpaid income tax, you might be feeling stressed or even a bit frightened, as the tone of such letters can sometimes be aggressive and intimidating. If you are eligible for tax debt relief, you can put a stop to these letters by filing a bankruptcy petition.
You can only discharge income taxes
Every year, you must pay tax to several entities, including federal, state and local governments. Even if you meet the qualifications, certain types of tax, such as property tax or school tax, are not dischargeable through bankruptcy. Income tax is the only type of tax debt you can alleviate through bankruptcy.
What are the requirements for tax debt relief?
The following list shows some of the requirements you must meet before you can discharge an income tax debt through bankruptcy:
- Three years have passed since the taxes were due.
- Your tax returns for the debt in question have been on file for two years prior to filing for bankruptcy.
- The IRS has assessed the debt within the past 240 days.
If you have received a bill in the mail within that time that itemizes your income tax debt, then the IRS has no doubt assessed your tax debt. By meeting these qualifications, you may be eligible to discharge unpaid income tax through Chapter 7 bankruptcy.
Erase tax debt and start building a new financial portfolio
Sometimes, discharging a debt, such as back taxes or a credit card balance, may be just the edge you need to stay afloat and lay the groundwork for a stronger financial future. Unexpected crises, like losing a job or suffering a serious health problem, are often enough to cause a financial disaster. By exploring options like bankruptcy, you may be able to join other Georgia residents who have found ways to alleviate debt and restore solvency.