Bankruptcy May Solve Tax Problems

Income taxes are sometimes dischargeable in bankruptcy. They may be dischargeable in Chapter 7 or Chapter 13 if:

  1. The tax return was filed on time and truthfully
  2. The taxes have been due for more than three years when the bankruptcy was filed.
  3. The taxes had been assessed for more than 240 days when the bankruptcy was filed.
  4. There is no tax lien recorded in the public records.

Even if there is a tax lien, in Chapter 13 we may have some way of reducing the amount that must be paid.

Trust fund taxes such as 941 taxes and sales taxes are not dischargeable and must be paid, either in a Chapter 13 plan or by you after a Chapter 7 filing.

Filing For Taxes After Bankruptcy

Taxes will be a part of your financial situation even after filing for bankruptcy. Knowing when and how to file, as well as the issues to watch out for, can make the difference between a high-stress situation and a smooth tax process.

Hathaway Sprague Law, P.A., is a Tallahassee firm with a board-certified consumer bankruptcy attorney with over 30 years of experience in the areas of consumer rights. We can help you find long-term debt relief and focus on your life after filing for bankruptcy.

Bankruptcy Tax Guide And Bankruptcy Code

The Bankruptcy Code requires that all taxes returns be filed and copies of up to four years returns be provided to the Chapter 7 or Chapter 13 trustee. If you fail to do so, your bankruptcy case could be dismissed.

Does Bankruptcy Clear IRS Debt?

It may, if the IRS assessed the tax at least 240 days ago and you have been due for more than three years at the time of filing. You must also be free of any fraud or tax evasion, and the taxes have to have been filed on time. These debts may be handled differently depending on whether you file Chapter 7 or Chapter 13, so your lawyer should advise you.

A Look At The Future | Bankruptcy And Taxes

Your Chapter 13 bankruptcy filing in Florida requires that you do not acquire any new debts after you file your case, unless you have court permission. Taxes can be considered a new debt if you are unable to pay for them. If you are concerned about having to incur new debt or new taxes during a Chapter 13, Hathaway Sprague Law's experience in these matters can guide you.

With creative problem-solving and compassion for clients, attorney Kathryn Hathaway can discuss your situation in a confidential consultation. Prospective clients can request an appointment via our easy online form, or call our Tallahassee office at 850-391-2884 (toll-free 888-858-5404).

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.