TAXES

Many people believe that income taxes cannot be discharged in bankruptcy.  However, this is not true.  Income tax debt can in fact be discharged if certain requirements are satisfied.  Generally, taxes can be discharged if:

1. The taxes were due more than three years ago,
2. Either, the tax returns were timely filed, or, the tax returns were filed at least two years ago,
3. There was no fraud or attempts to evade tax; and,
4. The taxes were not assessed within the last 240 days.

If you meet all of these requirements, it may be possible to discharge your tax debt in a Chapter 7 bankruptcy.  Further, if your taxes were due more than three years ago and the taxes have not been assessed in the last 240 days, but you have not yet filed the tax returns or there was some kind of fraud involved in filing them, then the tax debts may still be dischargeable in a Chapter 13 bankruptcy.

However, bankruptcy laws regarding the discharge of tax debts are complicated and depends on a debtor’s specific circumstances.  You should consult a bankruptcy attorney if you have an outstanding tax debt.