Bankruptcy and Taxes

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Believe it or not, not everyone gets a tax refund every year. Oftentimes, unexpected tax liabilities occur due to early withdrawals of retirement funds, unexpected income, miscalculation of tax withholding throughout the tax year, or a buildup of several years of not filing a tax return due to fear of not being able to pay whatever amount becomes due. Alas, if you are in this situation, you do not have to fear filing the appropriate tax returns and you do not have to fear the IRS or other taxing authorities because you are unable to pay back taxes. Filing a bankruptcy can not only give you a second chance with your debts, but it can also give you a second chance with your tax situation—you can finally get all of your tax returns filed now, make favorable arrangements to pay any amounts due in bankruptcy, and most importantly, you will not be in “trouble.”

Do you Owe any Tax Amounts for Tax Years Over 3 Years Old?

Taxes and bankruptcy

As a general rule, you cannot discharge or eliminate taxes in a bankruptcy. However, taxes that have been assessed and are now over 3 years old CAN be discharged in bankruptcy and will not have to be paid. You should contact our office as soon as possible to determine if you qualify for this benefit.

Do You Owe any Tax Amounts for Tax Years Under 3 Years Old?

Bankruptcy benefits for tax

Bankruptcy can still provide you with significant benefits to pay your taxes if they are less than 3 years old or if you otherwise do not qualify to have taxes over 3 years old discharged. By filing a Chapter 13 bankruptcy, any tax that cannot be discharged can be paid over a 36 to 60 month time period interest and penalty free. Bankruptcy makes it significantly easier and more manageable to repay past due taxes without the extraordinarily high penalties and interest charged by the IRS. Again, you should speak to a bankruptcy attorney about these benefits and how they apply in your particular situation.

General Information Regarding Taxes

General tax information

• Real estate taxes are excluded from the benefits discussed above.

• Sometimes past due taxes that cannot be discharged are so significant that you should consider another option called an offer and compromise. Our office does not represent clients in an offer and compromise, but it is important to coordinate submitting any such request with a possible bankruptcy filing. By meeting with us we can discuss this option with you, refer you to someone who has represented our clients and coordinate any bankruptcy filing, if bankruptcy is still necessary to resolve other debts.

• Bankruptcy laws require all prior tax returns to have been filed, and in a strange way this is good news. We have represented many clients who, for one reason or another, have not filed tax returns for the last 5 to 10 years. Now, with the filing of a bankruptcy you can correct your prior tax return history, eliminate your other debts, and get a true second chance!

• Link to IRS website:

• Link to Illinois Department of Revenue website:

• Link to Missouri Department of Revenue website:

Important Disclaimer: The information discussed above and throughout this website should not be relied upon to make any decisions without first speaking to a bankruptcy attorney. There are many intricate rules of law governing bankruptcy with many exceptions to the general rules that could change the advice given by an attorney based on the differing facts in each person’s special set of circumstances. THEREFORE, it is important to discuss any information contained in this website with one of our attorneys before taking any action or refraining from taking any action.

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Coronavirus: Our Office And Your Safety

Our Offices In Illinois And Missouri: Our offices will continue to remain open to serve all our current
and future clients as we, as attorneys, have sworn an oath to uphold! A Bankruptcy Law Firm, LLC provides
legal and financial services in which Illinois and Missouri have deemed our law offices essential business
activities. Michael J. Benson is committed to ensuring each and every client is being responded to as
immediate as possible, please read below to help our law firm be more efficient so that we may help
EVERYONE with ALL your questions and concerns, especially during these uncertain times.

Precautions: Until the “Stay at Home” Orders have been lifted our offices are functioning 100%.
However, for the safety of you and our employees we are limiting in-office appointments to only those
appointments absolutely necessary, and we are timing appointments so that there will be only ONE client
in the office at any particular time. Therefore, we need your help, patience and understanding to achieve
this goal. We ask our clients to minimize their movements within our offices upon your arrival and to
refrain from using the restrooms at this time. Further, we are disinfecting the waiting area and the office
where your appointment will be held to the best of our ability in between each and every client.
Current Clients: At this time, we are conducting ALL appointments with current clients via telephone
or email communication. Michael J. Benson prefers to give personal attention to each and every client
and to meet his clients personally as much as possible throughout your entire case. However, safety
comes first during this pandemic, and therefore, we will not hold in-office appointments. Further, we
kindly ask clients to not arrive at the office unannounced as this may cause more than one client in the
office at a given time and jeopardize the safety of others—PLEASE respect the safety of others! In regards
to turning in required documentation for your case, please call the office to coordinate.
New Clients: We are still meeting with new clients who have bankruptcy questions now more than ever.
We will meet with you in person and our goal is that you will be the only client in the office at a given
time. If you believe you may have coronavirus symptoms, tested positive for coronavirus or if you are an
at-risk person, then please let our office know and we can schedule a phone consultation so that you can
still receive answers to your questions and concerns.
Phone Calls And Voicemails: Please understand that our office, like every business, is experiencing
an extraordinarily high volume of calls during this time. Again, our office is 100% committed to responding
to our clients as fast as humanly possible. WE NEED YOUR HELP – if you call the office, please leave a clear
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an idea why you are calling, then you will get a quicker answer and it will enable us to be more efficient
so that we can answer more phone calls in the same amount of time so that we can give our clients the
best possible legal care!