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One of the major benefits for taxpayers filing for protection under the Bankruptcy Code is the automatic stay, which prevents the IRS from taking certain collection actions.  The IRS’s claim is secured when the IRS has filed a pre-petition Notice of Federal Tax Lien against the debtor’s property.  Generally, taxes incurred within three years of the bankruptcy petition’s filing date are not dischargeable in the bankruptcy proceeding.

Tax Tip – If the tax liability is greater than three years, it may be discharged unless the debtor did not file a tax return, acted fraudulently, or late filed within two years of the filing of the bankruptcy petition.
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