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How to avoid paying Income Tax? Go bankrupt?

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asked on Aug 17, 2004 at 21:14
by   Badboy
edited on Mar 20, 2017 at 08:57
 
I understand that a bankrupt person can be free from his huge debt after 5 years. But what happens if the debtor is 'The Income Tax"?

Is there any other kind of debtors that he still have to settle his bills?

Thanks.
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6 Answers

answered on Aug 19, 2004 at 01:14
by   Unni
edited Mar 20, 2017 at 08:58
 
The department of income tax is always a preferred creditor whether in a liquidation or bankruptcy. They take their 'pound of flesh' first. Then the others. If you do not pay, even if you have completed your 5 years in the wilderness you are not totally free. The department of income tax has the privilege to extend your period of bankruptcy and also go after your assets on the slightest whif of a concealment of your assets to avoid paying your creditors.

You are right to an extent that you can avoid paying taxes by declaring bankruptcy. But at what cost are you avoiding a personal duty?
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answered on Nov 27, 2004 at 16:07
by   Indoubt
edited Mar 20, 2017 at 08:59
 
I do not believe this exists even after 5 years of bankruptcy. You will not be allowed to leave the country as your passport is impounded. Well unless you are a O.A.P (Old Aged Person).
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answered on Nov 27, 2004 at 16:12
by   Maybe
edited Mar 20, 2017 at 09:00
 
It's quite easy to go bankrupt nowadays. Yes, if you are owing too much income tax.
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answered on Nov 28, 2004 at 03:43
by   Unni
edited Mar 20, 2017 at 09:00
 
At the time of bankruptcy, all monies owned to and proven by the department of taxation is collectable and payable even during and or after bankruptcy. Going bankrupt is not the answer. An installment plan is a better way round. By the way, do you know that much of the reason behind huge income tax bills is the lack of tax planning or advice.

Accountants are not the best source of taxation advice. A good lawyer with a tax background is the better choice. You may appeal income tax decisions and find that much of the assessment could have been flawed or wrong in the first place.

THINK
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answered on Mar 16, 2017 at 14:38
by   Suji
edited Mar 20, 2017 at 09:01
 
My uncle is a bankrupt and for the pass 2 years he has been paying the agency every month. At the same time he receive an income tax warrant asking him to pay tax. He is jobless now. What should he do? Thank you.
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answered on Mar 16, 2017 at 15:51
by   Azizi
What should he do ? 
Wait till he has been discharged from bankruptcy and started working again, then start to pay IRS by installments. There is no Limitation period. He can ban from overseas travelling by the Tax Dept.
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