While taxes are a big concern for bankruptcy filers nationwide, it is a particularly pressing issue for Oregonians. This is so because in addition to taxes that might be due and owing to the IRS, Oregonians have to worry about taxes owed to the Oregon Department of Revenue.
While the IRS is always fairly reasonable about collections issues, the Oregon Department of Revenue employs some of the most aggressive collectors in the country. Truth be told, I would rather have any twenty national payday loan collectors after me than one Salem collector for the Oregon Department of Revenue. So Oregonians care about tax liability.
Luckily bankruptcy is a great tool for dealing with taxes. Some state and federal taxes can be eliminated altogether with no duty of repayment. Other state and federal taxes can be repaid slowly at zero percent interest with no penalty.
You can even make them wait until you have paid off any loans that you have tied to personal property so that you can deal with the debts with interest rates first. Can’t beat that. In terms of eliminating taxes altogether with no duty to repay, the taxes at issue generally must meet two main conditions.
First, you must have filed the tax returns over two years ago. If you want to resolve this with any certainty, you need to contact the IRS and the Department of Revenue (Most likely Oregon) for any state that you are worried about to determine when they show the taxes as actually being filed.
Second, the taxes need to have been due more than three years ago. Remember that this three year period runs from whenever these taxes were last due. While taxes are normally due on April 15th, if you asked for an extension, the three years likely did not start running until October 15th of that same year.
Remember also that there are two conditions that could possibly come into play for some Oregonians. They don’t come up that often, but we want to be sure.
First, more than 240 days must have passed between the date that the tax was assessed by the IRS/ODR and the date you file your bankruptcy case. This is rarely an issue because assessment usually occurs within a few weeks after you get your tax returns in. So you automatically meet this 240-day condition when you meet the 2-year and 3-year ones. It only becomes an issue when assessment gets delayed with an offer in compromise, audit, actual litigation in Tax Court or some other similar matter.
Second, if you file a fraudulent tax return or intentionally evade a tax, it cannot be discharged in bankruptcy. This is pretty rare. It happens only if you were materially dishonest on your tax return, by not including some of your income, or by intentionally claiming deductions or credits which you knew you were not entitled to, or by cheating the IRS/state in some other way.
Assuming that these last two conditions don’t apply to you, and you filed your tax return for the tax in question over two years ago for taxes that were due over three years ago, you shouldn’t have any trouble discharging the taxes just like you would a common credit card.
If you want to talk tax discharge, book an appointment to see one of our bankruptcy attorneys in Portland, Salem, Vancouver or Sandy. We would be happy to help and look forward to getting your the relief you need under the bankruptcy code.