Will a Bankruptcy Application trigger the IRS Audit?
Question: I am thinking of filing for a Chapter 7 Bankruptcy and I have heard that the IRS will take this as a threat. I don’t understand how this is so and aside from this I also would like to know in advance what to expect. Please advice.
Answer: There are no written or unwritten policies that state that the IRS will audit a debtor who has filed for a bankruptcy. In the new millennium, there were already more than 1.5 million individuals who have filed for bankruptcy and if what you have asked is the case, the IRS would have ran out of manpower just to settle or screen out these debtors. However, this does not necessarily mean that your return will not be singled out but it also does not mean that your return will be placed in front of the audit line.
