One of the main questions I get from my bankruptcy clients is, “Can I file Chapter 7 bankruptcy on my income taxes?” The answer is YES, but there are a number of requirements before doing so. This article will try to shed some light on what those requirements are.

The first concern is that the taxes in question are based on income taxes and not on some other form of tax. Which means the debt in question must be federal or state IRS or taxes based on gross income. Second, the return on which taxes are due must be at least three years old. These maturities must be at least three years before you plan to file your chapter 7 bankruptcy petition. This must also include any extensions that have been filed, which would be added to the end of that three-year period. In addition, the return in question must have been filed at least two years previously. It is also important to know that to avoid objections in bankruptcy court by the taxing authority, the return must be executed, mailed, and complete enough to be considered a true return for these purposes. Another requirement is that the taxes have been paid at least 240 days ago. Which means that the tax authority in question must have assessed the debt against the person filing for bankruptcy at least 240 days before filing the bankruptcy application, which means that it has been recorded as a debt in the records of the authorities fiscales at least 240 days before the presentation. bankruptcy petition. The final requirement for the discharge of income taxes under bankruptcy is that there was no fraud or willful evasion of said taxes. Essentially, the return must not be fraudulent or frivolous and the requesting party cannot be guilty of intentionally evading any law.

It is also important for the bankruptcy filer to realize that not all tax debts are dischargeable under Chapter 7 bankruptcy, you cannot get rid of non-income tax debts. The following is a brief summary of the types of taxes that are not dischargeable under Chapter 7 bankruptcy. Tax liens which are also known as secured taxes and are attached to property such as your home cannot be discharged in a chapter 7 bankruptcy. Essentially, you will not be responsible for paying the taxes, but if the taxing authority placed a lien on your property to secure the debt, this will not remove the lien. Your bankruptcy attorney could file a motion to avoid liens, but liens placed on the property, just as if you had a claim for a lien against your property, are not automatically removed through a bankruptcy proceeding. Another form of tax, which is not downloadable, is recent property taxes. If you were assessed property taxes before filing bankruptcy, that tax is not dischargeable. Although this only applies to property taxes that were paid within a year of your bankruptcy filing. Another form of tax that is not dischargeable is taxes that a third party is required to collect or withhold. These are what are sometimes called “trust fund” taxes, such as FICA, Medicare, and income taxes that have been withheld from your employer. There are also various other forms of taxes that are not dischargeable, such as excise duties, customs duties, non-punitive tax penalties, and taxes like that. Finally, refunds that were improper or undischargeable tax-related credits will not fall under the rules of Chapter 7 bankruptcy.

In conclusion, you can discharge the income tax debt in a Chapter 7 bankruptcy proceeding if all the requirements have been met. That is why it is always important that you seek representation from an experienced bankruptcy attorney in your area to handle these matters.