Louisville Kentucky Income Tax Bankruptcy Attorney
There are Five (5) requirements to discharge “Personal Income Taxes” in Chapter 7. If you do not meet ALL these requirements, then you can usually discharge in Chapter 13.
- The tax you seek to discharge must be due from a tax year over three years old. For instance, you could discharge your 2007 in 2011,because they are income taxes, that were due on or before April 15, 2008 (three years earlier). You cannot discharge your 2007 tax liability until after April 15, 2011. If you filed for an extension to allow you to file your taxes late October 15th 2008 then you must wait until after 10-15-2011.
- The tax return must have been filed more than two years before the bankruptcy is filed. If you filed and extension your tax returns on October 15, 2008, you cannot discharge them in a Chapter 7 bankruptcy before October 16, 2010.
- The tax you seek to discharge must not have been assessed within 240 days prior to filing for Chapter 7. You must add on top of this any period of time that an offer in compromise was pending, plus 30 days. This means that if you wanted to file bankruptcy on March 15, 2010, the tax must have been assessed on or before July 18, 2009.
- If the tax was assessed on June 30, 2009, but you filed an offer in compromise on July 1, 2009 and the taxing authority did not get back to you until October 1, 2009, you must wait until at least June 28, 2010 to file and get a chapter 7 discharge.
- The tax returns filed must not have been fraudulent or involved with “a willful attempt to evade or defeat the tax.”
- Filing any bankruptcy within the 3 years will extend the 3 and 2 year waiting period.
The hardest questions to determine are:
- what date did the tax get assessed (Item 3 above).
- When was the required return or report “filed” and when. A substitute return filed by the IRS does not constitute a “filed” return.
{ 3 comments… read them below or add one }
I have an installment agree. Left remaining are on years 2002 and 2003.
Much is penalty and interest. Can I Bankrupt the taxes or get relief on the
penalty a interest.
I am 69 and my wife 66 and our house is in foreclosure.
Yes of course you can bankruptcy this. The taxes are over 3 years old and I presume you filed tax returns and that there was no assignment within 240 days.
Of course you can bankrupt these taxes. They are old enough and as long as you filed these returns at least 2 years ago and there was no fraud this meets the rules. The taxes only have to be 3 years old and the returns have to be filed 2 years ago.