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DISCHARGE IT: BANKRUPTCY FACTS

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Facts regarding discharging taxes in bankruptcy:

  • Federal income tax debts except payroll related taxes as an employer, may be eligible for discharge under Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
  • Only if you meet all of the conditions required to discharge taxes in bankruptcy will you be relieved of the tax liability.
  • Always file and if full pay your taxes once you go into a Chapter 7 Bankruptcy.  Filing income taxes while in a Chapter 13 bankruptcy is required to have your plan confirmed by the Court.
  • All past tax returns must be filed before you can complete a bankruptcy.
  • A tax lien that has attached to property you have title too will survive the bankruptcy in most cases.  For further information read tax lien properties.
  • None of the taxes discharge in a bankruptcy can be from returns that were fraudulently filed.
  • Tax debts from unfiled returns with assessments from substitute for returns are not dischargeable in a bankruptcy.
  • Please read: Tax aspects of bankruptcy before making your decision to file to discharge taxes in a bankruptcy.