What’s the first step in discharging taxes in bankruptcy? Will your IRS and/or Georgia state taxes be discharged in bankruptcy?
Those are great questions–the answer depends entirely on how old the tax debts are and how the IRS / Georgia Department of Revenue have processed and classified your returns.
When you consult with me about taking that first step in discharging your taxes by filing Chapter 7 or Chapter 13 bankruptcy, the first step we will likely take is analyzing your tax account transcript for each year where you think that you owe taxes. The tax account transcript is used to analyze whether taxes are discharged in bankruptcy because it contains all the codes that tell us how the IRS has classified and processed the debt.
Timing is everything when it comes to analyzing tax dischargeability. File too soon and you may be cutting off your ability to discharge your taxes. That means you need advice from an attorney who has the knowledge and training to advise you about your transcripts. You’ll want to know for certain whether your bankruptcy discharges your taxes before you file.
The good news is that you can obtain the tax account transcript for free from the IRS. Up until late May 2015, one could actually download the tax account transcript directly from the IRS.gov website. IRS ended that feature because hackers were using the download to illegally obtain information from returns–and though we expect IRS to resume downloads at some point in the future, for now you can request a tax account transcript from IRS.gov and IRS will mail the transcript to you.
Then it’s my turn to analyze each tax year and explain your options to you about filing bankruptcy to discharge taxes.