Income Tax Bankruptcy Louisville Kentucky
The rules for a Federal IRS income tax bankruptcy and a Kentucky state income tax bankruptcy is the same. It is also basically the same for other states. (by Louisville Kentucky Income tax, bankruptcy attorney Nick Thompson)
- The income taxes must have been due for 3 years before filing the bankruptcy
- If you filed for an extension then count 3 years from the extension reporting date
- If April 15th fell was a holiday or weekend add days until the next business day
- The income tax return must have been filed at least 2 years before filing bankruptcy
- There must be no assessment of income tax liability for 240 days prior to filing bankruptcy
- There must be no attempt to evade or fraud in the return or a discharge will not be granted. If the IRS is forced to file a substitute for return because the taxpayer failed/refused to file there is normally is no discharge.
Filing an offer in compromise, asking for a due process hearing or filing bankruptcy will increase the waiting periods to discharge income taxes in bankruptcy. These additional periods depend on how and when these actions were filed. Always obtain a copy of your tax transcript and record to determine whether or not you have waited long enough to file and bankrupt your income taxes.
Although Income taxes can be bankrupted, Trust taxes cannot be discharged. However, Bankruptcy court is far more friendly to the taxpayer than the IRS and the Bankruptcy Court allows a taxpayer to keep more property, take time to repay, and allows the debtor to discharge (avoid) trust tax penalties and interest. If the amount of the tax has not been determined by a prior court the bankruptcy court will be more friendly to the taxpayer than tax court.
Filing bankruptcy will only eliminate the personal liability of the debtor. A tax line is just like a residential mortgage. Filing does not normally avoid or modify the lien. Income tax liens are harder to avoid in bankruptcy than other liens. However tax liens dissolve at the end of 10 years unless the IRS sued the taxpayer in District court. Judicial liens have a 20 year life but can be avoided .
Income Tax Bankruptcy Louisville Kentucky Attorney Nick C. Thompson Licensed with the Washington DC US Tax Court as License # 51
