Are Taxes Dischargeable In Bankruptcy?

Jul 8, 2014Bankruptcy Law0 comments

The internet is littered with false information regarding discharging taxes through bankruptcy. It is very important that a qualified bankruptcy attorney properly advises you on the specifics of discharging your taxes. This is a complicated area of the law that requires a very specific analysis of the type of taxes, age of the taxes, date of filing of the required tax returns (if any), if the taxing entity has properly recorded a tax lien in a county where you reside, and if you have consented to an offer-in-compromise with the taxing entity for payment of the taxes.

As a general rule, many taxes can be discharged through either a Chapter 7 bankruptcy or Chapter 13 bankruptcy. Unpaid income taxes due for a tax year where the tax return was to be filed at least three years ago may be discharged as long as the tax return for the year of unpaid taxes was filed at least two years ago and an assessment of the unpaid tax was made at least 240 days ago by the taxing entity. And even taxes that are not discharged may be paid through a Chapter 13 bankruptcy repayment plan to eliminate all future penalties and interest.

If you have a problem with unpaid taxes, you should first consult with the RQP Law before handling it on your own or through your accountant. Our firm routinely works with accountants to maximize the taxes that are discharged in bankruptcy. The best time to consult with RQP Law is before the IRS or Pennsylvania Department of Revenue seeks to levy on wages or assets. However, it is never too late to get thorough legal advice and put a strategy together that will solve the serious problem of unpaid taxes.

Failing to address unpaid taxes can result in harsh penalties and collection efforts for years to come. It may be resolved through filing a bankruptcy and discharging all or some of the taxes through a Chapter 7 or Chapter 13 bankruptcy. Clients have reported that if they had known that taxes could be discharged, they would have dealt with the taxes sooner and avoided years of stress.


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