Taxes and Bankruptcy
West Palm Beach Bankruptcy Attorneys
While many debtors believe that tax liability cannot be discharged in bankruptcy, it is possible to discharge certain tax liabilities under the Bankruptcy Code. When you are considering personal bankruptcy, you are likely to have many questions about the types of debts that can be discharged. The bankruptcy laws that govern the discharge of tax debt are extremely complex, and it’s very important to discuss your case with a qualified bankruptcy lawyer.
At Kelley & Fulton, P.L., we have experience handling bankruptcies that involve significant tax debts, and we can answer your questions for you today. If you are thinking about filing for consumer bankruptcy and have tax debts, you will need to have an experienced Florida bankruptcy attorney on your side, and we can help.
Discharging Income Taxes in Bankruptcy
Can you discharge your income tax debt by filing for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy? While the possibility for discharging income tax liability is a bit different depending on the type of bankruptcy, in general under 11 U.S.C. § 523 and 11. U.S.C. § 507, income tax debts cannot be discharged by filing for personal bankruptcy unless they meet certain requirements. Income tax debts that meet the following requirements may be eligible for discharge if:
The tax return from which the tax debt arose was due to be filed more than three years before the date on which you filed for bankruptcy. For example, if you accrued an income tax debt from a return that was due to be filed on April 15, 2012, you may not have this income tax debt discharged unless you file for bankruptcy after April 15, 2015. The three-year time period requirement includes extensions.
The tax return from which the tax debt arose was actually filed at least two years before the date on which you filed for bankruptcy. For example, if your tax return was due to be filed on April 15, 2010 and you declared bankruptcy on April 16, 2013, you must have actually filed the return by April 15, 2011.
More than 240 days have passed from the time the I.R.S. assessed your taxes and the time you filed for bankruptcy.
It’s important to keep in mind that other income taxes may not be dischargeable even if they meet these requirements. Specifically, substitute tax returns (those that the I.R.S. files on the debtor’s behalf) aren’t eligible for discharge; you also cannot discharge a federal tax lien. In addition, any taxes related to a fraudulent tax return or fraudulent activity won’t be dischargeable through bankruptcy.
Are interest and penalties on income tax debt dischargeable? Typically, the answer is yes, but discharging tax debt can be a complicated process, and it’s very important to have an attorney assess your specific situation.
Contact a West Palm Beach Bankruptcy Attorney
Tax debt and bankruptcy can be quite complicated. However, with one of our experienced Florida bankruptcy lawyers on your side, you may be able to have income tax debt, as well as other forms of tax liability, discharged through bankruptcy. Filing for bankruptcy is often a stressful process, but at the law firm of Kelley & Fulton, P.L., our West Palm Beach bankruptcy attorneys have years of experience assisting residents of South Florida. Contact us today to learn more about how we can help.