Can I Discharge Past Due Taxes in Bankruptcy?

QUESTION:

I have delinquent taxes from several years ago. Can I discharge those taxes if I declare bankruptcy?

ANSWER:

The answer, as in most cases in the law, is “maybe.” The more recent an unpaid tax liability is, the less likely it is to be discharged in bankruptcy. The most common consumer bankruptcy is the Chapter 7 bankruptcy, which, if you qualify, discharges all of your debts. Generally, if you are paying all of your debts except for your taxes, you will not qualify to file a Chapter 7 bankruptcy. If you do qualify for a bankruptcy, there are still several tests which must be met before taxes can be discharged. The first general rule is that the taxes must have been due and assessed more than three years prior to filing the bankruptcy. Also, you cannot discharge taxes which have not been filed. In addition, if the taxes were filed after the due date, they must have been filed at least two years prior to filing bankruptcy. As you can see, there are many rules which must be met before taxes can be discharged in bankruptcy. Many times bankruptcy is not the answer, and there are several ways we can negotiate with the IRS regarding your tax liability. If you have any unpaid taxes, whether income tax, payroll tax or other types of tax, I will be happy to talk with you about your situation and tell you how I can help. Your initial consultation is free and you will be under no obligation. The sooner you take action to solve your tax or other debt problem, the sooner you can rest easy and cease worrying about those taxes and debts! My firm also handles divorce, real estate, and probate matters. We also prepare wills, powers of attorney and provide other estate planning services. Please call today for a free consultation.