Bankruptcy and the IRS

Can filing bankruptcy stop IRS collections? My tax liabilities are unmanageable and when it is tax talk my mind hemorrhages, and when I hear IRS...it makes me want to be 5 again and ask for parental protection. Can somebody please help. I really do not like the idea of IRS coming after me - any advice would be appreciated, thank you in advance

Sorry to hear of your predicament and I have a good news for you-yes filing bankruptcy can stop the IRS collection actions such as property seizures, wage garnishments, bank account levies, Federal Tax Liens, as well as some lawsuits in Tax Court proceedings-via what's called the automatic stay.

What happens is that when you file bankruptcy, it brings your tax issues into the bankruptcy court forum, which can help you get rid of your tax liabilities through a discharge or a reorganization of your tax liabilities in a repayment plan.

I can empathize with you there. The terms bankruptcy and IRS put together does sound like a slow and painful death via the hands of the government...and I'm glad that you have kept your sense of humor amidst your situation. But before anything else, are you  sure that you are eligible for bankruptcy? There are conditions that you have to meet like the  bankruptcy means test. Then you have to determine which chapter you are to file or rather you have to qualify for either Chapter 7 or Chapter 13. 

I'm sorry to hear that it's giving you so much stress. Have you heard of the term "debt stress?" You might want to see a psychologist to manage that.

And speaking of qualification, make sure that you prove to the IRS that you did not evade paying your taxes, that you did not fraudulently filed your tax return, or else your income tax liabilities might not be discharged in your bankruptcy petition.The  IRS is tough on consumers tax frauds.

Ah. That's such a relief to know and no, my back taxes were due to unemployment and family issues. I should like to pay them off, if only I know how. I wonder if I can do that outside of bankruptcy...

It is, actually, but you have to submit a contract for them to approve. What you can do is send your tax return with a contract to pay in monthly installments. Most states though don't have a an official rule or law for installment payments. That in the end you may have to pay the state income taxes in full.
The IRS will will automatically accept the contract if the payment plan that you have presented on the form shows that you are serious about paying off the debt. So make sure that the offer you give them is credible. 

Next step is for you to fill out and sign the federal income tax form. Then print out a copy of Form 9465 or the Installment Agreement Request from the IRS website or at the IRS offices.You have to determine and decide the regular amount that you can send them. It should be proportional to your bill. It is important that you display a good-faith effort to pay. You could also try to pay in full within 12 months. You also have to specify the date that they can expect your check, take into account the number of days it would take for it to get to them. If you'd rather the payment is made via the bank, then fill out the bank information that way payment is going to be automatically deducted from your bank account each month. Then sign the form and attach it on top of the income tax return. The last step is to mail it to the IRS with your initial payment.
 

The question is, "Can bankruptcy stop the IRS....from doing what?"

For example, do you mean, can bankruptcy prevent the IRS from garnishing wages, levying a bank account or filing a federal tax lien?

Or, do you mean, can bankruptcy prevent the IRS from collecting on back taxes that are owed?

Please clarify and I will be happy to provide some insight.

Right, for example, only income taxes may be discharged in a bankruptcy, and even then there are many requirements that must be met for the debt to be considered for discharge. I am not exactly sure what all of these requirements are but I know that outside of income taxes no other tax debt can be discharged.

I have some back taxes and a boat- could they go after that?

I am not a tax expert but it is my understanding that the IRS reserves the right to "go after" your boat if you leave the tax debt unresolved.

The Internal Revenue Code (IRC) Section 6331 grants the IRS the power to seize assets from a taxpayer who has not satisfied a tax liability- either in part or in full.

Just so you know, IRC Section 6330 requires the IRS to send out a Notice of Intent to Levy first to the taxpayer to notify them of their intentions and to give the taxpayer 30 days to respond in writing to request a hearing.

Typically the IRS will only attempt to seize an asset from a taxpayer with back taxes who is avoiding or refusing to work with them to establish repayment terms. If you want to avoid putting an asset at risk of seizure I suggest seeing what your options are for an Installment Agreement (payment plan) or an Offer in Compromise (settlement) to satisfy the debt.