Wyoming Tax Debt Lawyers

Millions of Americans face the unfortunate reality of accumulating significant tax debt. In some cases, this debt can have a devastating impact on a person’s family and future. If you’re facing an overwhelming amount of tax debt, our knowledgeable and compassionate Wyoming debt relief lawyers are here to help. Contact 307 Bankruptcy today for a free consultation.

Can Tax Debt Be Discharged In Bankruptcy?

Tax debt can be discharged in bankruptcy under specific circumstances, but it requires careful evaluation of your financial situation and the type of taxes owed. In general, federal income tax debt may qualify for discharge if it meets certain criteria, while other types of taxes—like payroll taxes or fraud-related penalties—are typically nondischargeable.

When tax debt qualifies, bankruptcy can provide a fresh financial start by eliminating these burdens or restructuring payments into a manageable plan. It’s important to remember, however, that the rules governing tax debt discharge are highly nuanced and depend on factors such as the timing of tax filings, the age of the debt, and whether you attempted to evade payment. A skilled bankruptcy lawyer here at 307 Bankruptcy can help determine if your specific tax debt can be addressed through bankruptcy.

What Are The Eligibility Criteria For Discharging Tax Debt?

To discharge tax debt in bankruptcy, several specific criteria must be met. These include:

• Type of Tax: Only federal income tax debt is eligible for discharge. Other taxes, such as payroll taxes or fraud penalties, cannot be discharged in bankruptcy.
• Age of the Tax Debt: The debt must be at least three years old. Taxes from recent years are not eligible for discharge.
• Filing Timeline: The tax return associated with the debt must have been filed at least two years prior to the bankruptcy filing. Returns filed late may complicate eligibility.
• Assessment Period: The IRS must have assessed the tax debt at least 240 days before the bankruptcy filing, or the assessment period must not yet have expired.
• No Fraud or Willful Evasion: The tax debt cannot result from fraudulent activity or a willful attempt to evade tax obligations. Honesty and compliance with tax laws are essential for discharge eligibility.

Meeting these criteria can be challenging, and even a minor discrepancy may affect your ability to discharge tax debt. That’s why it is paramount that you retain a team of skilled Wyoming tax debt lawyers who can assess your circumstances and determine the best path forward.

Which Type of Bankruptcy Is Better for Tax Debt: Chapter 7 or Chapter 13?

Determining whether Chapter 7 or Chapter 13 bankruptcy is better for addressing tax debt largely depends on your financial circumstances. Here are some things you should consider:

• Chapter 7 Bankruptcy: Often referred to as “liquidation bankruptcy,” Chapter 7 may allow you to discharge eligible tax debt entirely, provided it meets the necessary criteria. However, this option requires you to pass the means test, which evaluates your income and expenses. Chapter 7 is typically faster than Chapter 13 but may not protect assets if they fall outside state or federal exemptions.
• Chapter 13 Bankruptcy: Known as “reorganization bankruptcy,” Chapter 13 allows you to create a repayment plan for tax debt over three to five years. While it doesn’t discharge tax debt as quickly as Chapter 7, it can help you avoid IRS penalties and interest while keeping your assets. Chapter 13 also accommodates nondischargeable tax debts, enabling you to repay them in an organized manner.

Contact Our Wyoming Bankruptcy Lawyers Today

The process of discharging tax debt via bankruptcy is complex, which is why you should never go through it without a team of skilled bankruptcy lawyers in your corner. Fortunately, you’re in the right place, and our legal team is here to help. Contact 307 Bankruptcy today to schedule your free initial consultation today.