- May 15, 2022
- Thomas Adam
In the United States, personal bankruptcy is a legal process that allows individuals to clear out their financial debts and start fresh. This means that any debts that may be owed could be automatically eliminated by the court system. However, before you make any decisions, it is important to know whether your tax debts will be cleared out by the bankruptcy process.
In some cases, tax debts are discharged in a Florida bankruptcy. However, this is not always the case, and there are certain factors that must be considered before any tax debt is cleared.
What is a Tax Debt?
A tax debt is a debt that an individual or business owes to the government as a result of not paying taxes. The amount of the tax debt can vary, depending on the amount of taxes that were not paid and the interest and penalties that have accrued. Tax debts can be difficult to pay off, especially if the individual or business is struggling financially. However, it is important to try to pay off the debt as soon as possible, in order to avoid more penalties and interest.
Who Can File for Bankruptcy in Florida?
The bankruptcy code allows individual debtors, businesses, and other entities to seek relief from their creditors. In order to be eligible for protection under the bankruptcy code in Florida, the debtor must meet certain requirements, including having a permanent domicile in the state. The debtor must also file all required documentation in a timely manner and attend any required hearings.
How to File for Bankruptcy in Florida
Individuals who reside in Florida and are experiencing financial difficulties may file for bankruptcy protection under Chapter 7 or Chapter 13 of the United States Bankruptcy Code. The specific chapter that best suits the individual’s needs depends on the individual’s income, debts, and assets.
The bankruptcy petition must include your contact information, income, debts, and assets. After you have completed the petition, you must file it with the court and provide copies to your creditors. You will also need to attend a meeting of creditors, which will be held around 20 days after you file your petition.
What Happens to Your Tax Debts After You File for Bankruptcy in Florida?
Tax debt could be forgiven based on the following three factors:
1. Types of taxes
Often, only income taxes owed may be waved. If you owe money in back income taxes, you may be able to get a partial refund under Chapter 7 or a full refund under Chapter 13. In rare situations, property taxes may also be eligible for exemption.
2. The age of the tax debt
Tax debt that is three years old or older is bankruptcy eligible. However, any “new” tax obligation accrued during the last two years is ineligible for cancellation.
3. If your tax return was correctly submitted
In order to be eligible for a discharge of tax liability, you must have appropriately filed your taxes. Any past effort to have dodged or falsified your tax return may disqualify you from a bankruptcy tax debt waiver.
Other Considerations When Filing for Bankruptcy
Bankruptcy can help to clear out some tax debt, but it often does not offer a complete solution. However, there are other options available for taxpayers who are struggling with tax debt, such as payment plans or negotiations with the IRS. For more information, and for assistance with your tax debt, it is important to speak with an attorney at Adam Law Group to understand the specifics of your case and to determine the best course of action.