Tax Debts

Bankruptcy has the possibility to clear some tax debt.

If a federal tax lien has already been filed against you then bankruptcy cannot get the tax lien lifted. If there is no federal tax lien then the filing of a bankruptcy, whether Chapter 7 or Chapter 13 can get rid of IRS, state, and local income taxes.

The most important aspect of discharging tax debt in bankruptcy is the timing of the bankruptcy petition. In order to discharge tax debt, the following elements must be satisfied:

  1. Your tax returns must have been due three years or more before the petition was filed;
  2. Your tax returns have to have been filed more than two years before the petition;
  3. The tax you owe must have been assessed against you by the government for at least 240 days before the case is filed;
  4. Your tax returns must have been truthful and not fraudulent; and,
  5. You must not have been intentionally attempting to evade or defeat the tax when you failed to pay.

If the debtor can satisfy these five elements then their tax obligation can be discharged in a personal bankruptcy.

If you are thinking of filing for bankruptcy to discharge tax liability then contact Shmucher Law, PL by calling 305.741.5553 or 239.299.7833.

Shmucher Law, PL, a bankruptcy law firm, represents debtors, creditors, and trustees in bankruptcy matters throughout Broward and Miami-Dade counties.