October 15, 2016 is coming up and so is the deadline for the extension for tax filing. I have several clients tell me that the reason why they did not file their tax return is because they cannot afford to pay the taxes owed. According to them, by not filing their tax return the Internal Revenue Service or Franchise Tax Board would forget that they owe taxes and will avoid a tax bill. WRONG!
If no tax return is filed, the IRS or FTB will file a tax return on your behalf and estimate the amount of taxes you owe. Not only that, they will add penalty of not filing in addition of the penalty and interest of nonpayment of tax debt. Usually, when the IRS or FTB estimate how much taxes owed, it is higher than what you actually owe had you filed your tax return.
Moreover, it also prevents you from getting a discharge through Chapter 7 or 13 Bankruptcy of old tax debt due at least 3 years from the date of bankruptcy filing if you did not file your tax return. Two other requirements to get your tax debt discharge is that you must file your tax return at least 2 years from the date of bankruptcy filing and the taxes must be assessed at least 240 days from the date of bankruptcy filing. Call for more information about additional requirements for discharge of tax debts through Chapter 7 or 13 Bankruptcy.
Call Muoi Chea, bankruptcy attorney in Sacramento, Stockton, Fairfield, CA if you have tax debts and want to know your options under Chapter 7 and 13 Bankruptcy. The initial bankruptcy consultation is always free because you need to know your options under the bankruptcy code. Bankruptcy attorney's fees are reasonable and payment plans are available because everyone deserves a fresh start from debts, especially IRS tax debt.