Why not? Okay, seriously why pay a tax debt if an option exists to eliminate the debt and pay nothing? I have yet to meet a tax debtor who does not have other debt issues. As such, the tax debtor usually needs bankruptcy anyway to resolve other debt problems and eliminating some or all of her tax debt is a fringe benefit of the bankruptcy. Bankruptcy tends to be the most comprehensive solution for solving the debtor’s financial problems.
Bankruptcy can eliminate some taxes; for taxes that cannot be eliminated in bankruptcy, it can usually impose on the IRS more favorable payments terms than the IRS may give you. Moreover, since bankruptcy will help the debtor with other debt issues, if certain tax debt cannot be eliminated in bankruptcy, the bankruptcy frees up the debtor’s resource to resolve the tax debt.
Unfortunately, you won’t get this advice from most tax resolution firms. Those firms are focused on one thing: charging you for a solution it offers, but not necessarily recommending a solution that maximizes your chances of success in resolving your tax issues and other financial problems.
Bankruptcy is usually an integral part to a comprehensive strategy to resolving tax debt.
Find out if bankruptcy makes sense of your circumstances, Contact Us for a Bankruptcy Tax Discharge analysis.
By: Matt Berkus