Can I Discharge Taxes During a Chapter 7 Bankruptcy?
1. Taxes are for a year where the return was due at least three years prior to the date of filing for bankruptcy
2. The taxpayer filed the return at least two years prior to the date of filing for bankruptcy
3. The taxes have been assessed by the IRS for at least 240 days prior to the filing of the bankruptcy case.
If the IRS has filed a proper tax lien, the taxes for any year covered by the lien are considered secured debts. In a Chapter 7 bankruptcy filing, personal liability for taxes can still be discharged, however the lien will continue to attach to any property and such the lien would survive the bankruptcy ensuring that the IRS could later collect from any property that existed at the time of the bankruptcy filing.
Chapter 13 bankruptcies and taxes differ from that of Chapter 7 cases because any taxes that are non-dischargeable in Chapter 7 must be paid as part of the Chapter 13 plan. But only the tax amount itself and interest must be paid; usually any penalties will not be required to be paid.
Because tax issues as well as bankruptcy can be quite confusing, speaking with a bankruptcy attorney may alleviate some of that stress. Our attorneys have substantial experience in Danvers, and surrounding communities, in reviewing IRS tax transcripts and evaluating whether your situation qualifies you to discharge your income taxes in bankruptcy, whether you file for Chapter 7 or 13.