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Tax Blog


Can I Use Bankruptcy to Eliminate IRS/State Tax Debt?

Yes, but it is not easy to determine. To eliminate taxes with bankruptcy it takes a knowledgeable tax professional and a bankruptcy attorney. The basic rules to eliminate taxes with a bankruptcy are:

  1. The tax liability must be three years old or older from the "due date" of the tax return, including extensions. So, for instance, if you were to file for bankruptcy in 2014, only taxes owed from 2010 or older can qualify.
  2. The tax returns themselves had to have been filed at least 24 months before the bankruptcy petition date. In other words, if you have failed to file returns, you can't file at the time of petition and get the amount owed discharged.
  3. 240 days must pass from the "date of assessment" of the tax. The date of assessment is approximately four weeks after the tax return is received by the IRS. The date of assessment is not the date the tax return was mailed, nor the date it was received by the IRS, nor the date it was electronically transmitted to the IRS. The exact date of assessment can be found on the Federal Tax Lien or on a computer transcript of the account for each individual year. If you owe an additional tax liability as the result of an audit, the audit amount has a different "date of assessment."

There are other detailed and complex issues that impact on whether or not you will qualify to reduce or eliminate taxes, penalties and interest owed with a bankruptcy. The Enrolled Agents at Demetriou, Montano & Associates have the knowledge and experience necessary to determine the best course of action for your situation.

If a Bankruptcy is not possible you may qualify to significantly reduce your liability with an Offer in Compromise. We can help you with those kinds of decisions.

Call today for a Free Consultation at 888-987-1040.

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Attorney at Law
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Certified Specialist, Taxation Law
"I have used the services of Demetriou, Montano Associates a number of times. In my opinion, they bring a very high level of expertise and ability to bear on unique..."

Tax Attorney, Asst. Commissioner IRS, Ret.
" I have referred dozens of clients to your firm. In every case, my clients have been thoroughly satisfied not only with your outstanding tax expertise, but also with your sensitivity..."

Bankruptcy Attorney
"I have referred many clients to you with the confidence that they will receive the best representation available and then be returned to me for ongoing accounting and tax preparation services."

"If I have a client with a major IRS collection problem, I look to Demetriou, Montano & Associates for assistance."

IRS Revenue Agent, Ret.
"I typically do not make recommendations, but Demetriou, Montano & Associates are Number One on my recommendation list."

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Demetriou, Montano & Associates is located in West Los Angeles California near the border of Santa Monica. We are licensed to help with tax problem resolution and intervention with IRS troubles throughout the entire United States, with an emphasis on the Southern California communities in and around Los Angeles, Orange County, Long Beach, Santa Monica, Irvine, Newport Beach, Santa Ana, Anaheim, Costa Mesa, Pasadena, Encino, Sherman Oaks, Riverside and San Bernadino.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.