QUESTION

Can taxes be discharged in a chapter 13 filing? how likely is a tax filing to be discharged under this manner?

Asked on Jul 14th, 2014 on Bankruptcy - Illinois
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Bankruptcy Attorney serving Burbank, CA
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It's not an issue of likely vs. unlikely.  Taxes are either dischargeable, or they are not.   Whether a tax is dischargeable or not depends on a number of factors, including the type of tax (e.g. income, sales, property, trust fund) age of the tax, when the returns were filed, when the taxes were assessed, and other criteria. It is not a guessing game and there are multiple exceptions and tolling provisions for each criteria.  For the general rules see my page on tax discharge in bankruptcy. In a Chapter 13 case, you are required to pay all priority taxes (those that are not dischargeable) 100% through your Plan.  Any non-priority taxes (which would be dischargeable) get paid whatever percentage you are paying unsecured creditors.  This assumes that the taxing agency does not have a lien against property on the date the case is filed.  If they do, then they are entitled to be paid the value of the assets on which their lien has attached.  This often needs to be negotiated. You need an very experienced bankruptcy attorney to analyze the dischargeability of the taxes and this requires obtaining transcripts of the tax owed from the taxing agency. Mark Markus has been practicing exclusively bankruptcy law in California since 1991.  He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization,  AV-Rated by martindale.com, and A+ rated by the Better Business Bureau. 
Answered on Jul 14th, 2014 at 1:17 PM

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