The Difficulty of Discharging Income Taxes in Bankruptcy

Posted By Jon Cooper || 29-Mar-2013

As bankruptcy laws are redeveloped and continually gone over, more and more filers are discovering that it is difficult to discharge income taxes.

In most cases, income taxes are dischargeable. This means that the obligation to pay these taxes can be eliminated in some circumstances. The debt must meet certain qualifications in order to be recognized as legitimate for bankruptcy discharge.

Normally, income taxes must be three years only on the date that the bankruptcy is filed in order to be discharged and they must not have been assessed in 270 days prior to the bankruptcy case being filed. It also must be more than two years since the returns were actually filed.

This last requirement is the one that is becoming a caveat in bankruptcy cases for many filers who want to have their income taxes discharged.

That is because some courts maintain that late filed tax returns are never dischargeable. The Bankruptcy code declares that if a tax return is filed late, then it is never dischargeable in bankruptcy. It doesn't matter whether or not any of the other requirements are met, this is the automatic fact.

Late tax returns are considered anything filed after April 15th of a year if there is no extension or after October 15th of a given year if you were permitted an extension.

The IRS does not necessarily agree that all late income tax filings should be dischargeable, according to a case that they took on in 2009. Still, courts in Alabama, Missouri, and various other states maintain that late tax returns should never be dischargeable.

Courts in the Ninth Circuit are still considering this issue, so it's important for you to remember that if your filings are late you may not be able to receive the discharge that you are hoping for.

If you need more information about dischargeable debts in bankruptcy then discuss your case with a San Diego Bankruptcy Lawyer at San Diego Legal Pros. With the right attorney on your side, you may be able to negotiate through your case and obtain the discharged debts that you were hoping for.

Categories: Bankruptcy

When You Are Looking for Legal Representation,

You Can Count on Attorney Jon Cooper.

Want to Learn More?

Get Started with a Free Consultation!

Get My Free Consultation