Can IRS debt be discharged in chapter 7 bankruptcy?

Question

I owe some credit card debt. I owe internal revenue services $9000 for the years 2005-2009. I filed these taxes on June 2009. I filed late tax return. I am unemployed and going through hard financial times.

Philip Boardman · Answer

Yes.

Michael McFarland · Answer

You seem to be off on the dates, because your 2009 return wouldn't have been filed before early 2010. However, assuming there was no fraud or other problems, taxes that were assessed on returns filed 3 or more years prior to the bankruptcy are generally dischargeable in Chapter 7. The code language is complex and confusing (see 11 U.S.C. section 523). Best to consult with an experienced bankruptcy attorney before filing.

Deborah F. Bowinski · Answer

You should consult with an attorney to be sure. The answer will depend upon the actual dates the returns were filed, whether the IRS filed substitute returns for you, whether there have been any additional assessments in the interim, etc.

Christopher Kane · Answer

The dischargeability of taxes in bankruptcy is very complicated. In your situation, from the facts you have presented, it looks like all that tax debt would be discharged if you file Chapter 7. The first rule for dischargeability is that the taxes have to have been due for at least 3 years when you file the bankruptcy. You have met that rule. The next rule is that the tax returns have to have been filed at least 2 years before the filing of the bankruptcy. You have met that rule. As long as the taxes have not be re-assessed within the last 240 days, and the IRS doesn't have reason to argue that you filed fraudulent returns or have been evading the tax liabilities, you could file Chapter 7 and discharge those tax debts.

Dorothy Bunce · Answer

Possibly, but I would need more information, such as whether the IRS filed a tax lien and why you owed the taxes to say for sure.

Robert Sisson · Answer

No.

Diane Drain · Answer

Possibly. Please understand that bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.

Michael Avanesian · Answer

Based on what you've said, yes it can. The only issue is what do you not know that you can't tell us? That's why you need to go in and talk to a bankruptcy attorney. That's what I recommend for you to do.

Michael O'Leary · Answer

The issue of late filed income tax returns has gotten very complicated. You should order Account Transcripts from the IRS for years 2005 and 2009 and, upon receipt of same, contact competent bankruptcy counsel for review of said Account Transcripts and advice on how to proceed.

Paul Ross · Answer

Generally speaking all of your debts would be dischargeable. There may be exceptions, but from the information you provided, you should be good to go.

Gregory Wald · Answer

This tax debt probably is dischargeable in bankruptcy because the returns have been due for more than three years and you filed the tax returns more than two years ago. You would also want to make sure that the taxes were assessed more than 240 days (8 months) ago. However, keep in mind that certain things can stop the running of the time periods, such as an offer in compromise or a previous bankruptcy case. Also you cannot have attempted to evade the tax.

Stuart Nachbar · Answer

Not usually.

John Moffa · Answer

Most of the taxes could be dischargeable. 2009 will depend on whether you sought an extension. All will depend on whether the IRS has a lien and whether you have any property to which the lien could attach, if there is a lien. The assessment date also needs to be known to make a final determination for each year.

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Can IRS debt be discharged in chapter 7 bankruptcy?

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