QUESTION
What will filing for a bankruptcy do to my taxes?
Asked on Apr 13th, 2015 on Bankruptcy - South Carolina
11 ANSWERS
Assuming you filed tax returns, income tax liability is dischargeable three years after a timely filing, and two years after a late filing. You also have to wait 240 days after an "assessment" by the IRS (i.e., an audit). There are a few other rules that come into play, so you must be very careful. Pay an experienced lawyer for an hour of their time to get the answers you need.
Answered on Apr 16th, 2015 at 4:42 PM
2 Awards
Your question is quite broad. If you are wondering if taxes you owe will be affected by bankruptcy filing that largely depends on how old they are what type of taxes they are and whether you filed a return. If you are inquiring with regard to the tax refund, if the irs owes you money at the time you file it is considered property of the bankruptcy estate and may be subject to turn over to the trustee.
Answered on Apr 14th, 2015 at 1:09 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Income taxes where you filed the return more than three years ago are discharged in bankruptcy. If you didn't file or you filed within 3 years, the taxes remain a debt. If you've got taxes that aren't dischargeable, you should consider a Chapter 13, you'll pay the taxes through the bankruptcy.
Answered on Apr 14th, 2015 at 1:06 AM
Generally speaking, taxes are not dischargeable in bankruptcy. If sufficient time has elapsed after filing your taxes, it may be possible to discharge older tax liabilities in a bankruptcy. All collection activity must stop when a bankruptcy is filed, so if you are being garnished for taxes, a bankruptcy will provide temporary relief. You might also be able to discharge penalties and interest on the tax debt. If your taxes are substantial, a chapter 13 bankruptcy may be a good solution to pay off the tax debt over a period of time up to 5 years. It will at least stop additional penalties from accruing on the debt while you are in the chapter 13, although interest continues to accrue.
Answered on Apr 13th, 2015 at 7:38 PM
You can eliminate old tax debt under certain circumstances, but un-filed or recent taxes won't be affected.
Answered on Apr 13th, 2015 at 6:03 PM
Could you be a little more specific in your question? Filing bankruptcy typically is not a taxable action and bankruptcy usually does not eliminate recent tax debt. But in some instances, if taxes were filed on time and have been owed for more than three years, taxes can be eliminated in bankruptcy.
Answered on Apr 13th, 2015 at 4:24 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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Very little, you will still have to pay all or most of them. The government makes the rules and therefore does not lose.
Answered on Apr 13th, 2015 at 4:19 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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The answer depends on your tax situation, and the Chapter of bankruptcy under which you file. Ordinarily, filing under Chapter 7 or Ch. 13 does not affect your taxes, except that certain kinds of taxes for certain time periods can be discharged in your case. A Chapter 11 case creates a new taxable entity which succeeds to the tax attributes of the debtor. It's always best in these matters to retain an experienced bankruptcy lawyer. Good Luck.
Answered on Apr 13th, 2015 at 4:19 PM
Debt Settlement Attorney serving Chicago, IL
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Law Offices of Daniel J. Winter
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If you owe taxes, some may be eliminated, but most are not. As far as income taxes on discharged debts, you won't need to pay anything.
Answered on Apr 13th, 2015 at 4:18 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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It depends. Taxes for which a return was due in the last two years (2 tax cycles), are not dischargeable. However, if you have filed your tax returns on time each year, even if you haven't paid off the amount due each year, and you have taxes due for which a return was due more than 2 years ago, they may be dischargeable in a bankruptcy case. However, if you tried to get the IRS to accept an Offer In Compromise during the past or filed another bankruptcy case in that time, the time may be have stopped running for some of the time (a concept called "tolling") and you may need to wait a bit longer to discharge more of the taxes. This is not something that can be done in a hypothetical situation. Each case is fact intensive.
Answered on Apr 13th, 2015 at 4:18 PM
Personal Injury Attorney serving Greenville, SC
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The Greene Law Firm, P.A.
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The answer depends on what kind of taxes and when they were filed. Payroll taxes are never dischargeable in bankruptcy. Personal income taxes must have been filed more than three years before filing the bankruptcy to be eligible for discharge. However, there are several other tests that must be met that are too detailed to flop into here.
Answered on Apr 13th, 2015 at 4:15 PM