Debt And Taxes

ive a question, im planning on filing bankruptcy--but for the past four years, ive been irregular on my tax returns--due to being in so much debt and a host of other issues--and i heard that ive to be current for four years for my petition to be granted?

It's true push, your taxes must be current for the last four years before you file bankruptcy (Chapter 13)-- but you can fix it. Hire the services of any of the following:

an accountant
an enrolled tax agent
or look into the tax preparation service

good luck!

In regards to debt and taxes- does the IRS ever settle tax debt?

Yes they do. The IRS refers to a tax debt settlement as an "Offer in Compromise."

In regards to debt and taxes and settling tax debt, is it easy to settle with the IRS? Is there some sort of qualification process? And what does the IRS usually settle for?

It is not easy to settle your tax debt unless you can demonstrate one of the following to the IRS:

1) Doubt as to Collectibility. That you will never be able to pay back the full debt amount. And I mean ever. All individuals who submit what the IRS refers to as an Offer in Compromise must also include a Form 433-A (Financial Information Form). This provides the IRS with your full financial layout, and also demonstrates what your potential is to pay it back in the future (based off of income, savings and investments as well as any assets you may have).

2) Doubt as to Liability. That you are actually not even liable for the debt that has been assessed, or that the IRS assessed the debt (or other "liability" such as interest) erroneously.

3) Effective Tax Administration Offer (Hardship Offer). That while you may have the potential to pay the tax debt off in full at some point, by doing so you may be putting yourself in a position of genuine hardship.

Essentially, that would be the "qualification process" that you were asking about. Except it is in your hands to prepare and submit the offer to the IRS, they won't come to you to try and settle as they would much rather be paid back in full, even if it takes time. That being said, the offers the IRS does accept to settle tax debt are low. In fact, recent stats suggest that the average settlement percentage with the IRS is less than 15% of the total debt amount. So, if you feel that you "qualify"- you could end up saving quite a bit.

Thanks for the info Steven- quick question- again in regards to debt and taxes and settling tax debt- I know you said it isn't often, but how many settlement offers does the IRS usually accept within a given tax year? I am a numbers guy so any additional info in regards to percentages would be great!

From the recent statistics that I have seen, it is suggested that the IRS accpets roughly 13-14% off all settlement offers they receive. One would have to imagine that number would be higher if you eliminated the offers from people who surely have no knowledge of the "requirements" that I discussed in my above post.

I have another question about debt and taxes- how much will the IRS settle for if I don't have any assets? Could I get a lower percentage do you think?

I do not know much about debt and taxes but regarding your question - you said that you have no assets -  if you can prove your financial hardship to the IRS then perhaps they'd give you a lower percentage. I've read that there are ways ways to get your account put on hold in the event that it's proven that you really can't pay ( as of the moment).

As to what ways those are, I do not know.