Can I Discharge Back Taxes in Bankruptcy?

1040 Tax Paper FileIt is a common misconception that taxes are never eligible to be eliminated in a bankruptcy filing. It is possible to discharge your back local, state and federal income taxes. You may also be able to discharge penalties and interest. If you have a significant amount of unpaid taxes and you are considering filing for bankruptcy protection, it is important to confer with us ahead of time to determine if your taxes are eligible for discharge.

Your personal income taxes can be discharged in bankruptcy if certain requirements are met, including:

  • You have not intentionally or willfully avoided paying your tax obligations and you are not guilty of tax fraud
  • You filed your tax return for the year(s) you are trying to discharge at least two years preceding your bankruptcy filing (substitute tax returns filed on your behalf by the IRS do not qualify)
  • The taxes you are trying to discharge were due a minimum of three years prior to the bankruptcy petition date
  • Any IRS tax assessment of your liability (for example, IRS audit or reported balance due) must have been completed more than 240 days before the bankruptcy filing. There are some circumstances where the 240-day time period can be tolled or suspended.

Sound confusing? Determining whether your income taxes are dischargeable can be complex, but we can help. Being able to discharge back taxes can save you thousands of dollars, so call us today.

Please keep in mind that every bankruptcy matter is different. If you are considering filing for bankruptcy protection, and you would like to schedule a no-cost consultation to discuss your options, please contact our office by completing the form on this website or calling us at (954) 932-5377.


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