Discharging Taxes

Orange County Bankruptcy Lawyer: Taxes and Bankruptcy

Tax debts create their own particular type of stress when they are overdue and there simply isn't enough money to pay them.  When considering bankruptcy, be very sure to provide your Orange County bankruptcy attorney with full information regarding each type of tax you owe in order to ensure no errors are made.  Some types of debts to taxing agencies are dischargeable in a Chapter 7 bankruptcy and some are not. 

Will You Discharge Taxes in Bankruptcy

Since in Chapter 7 the court will discharge (cancel) those debts which qualify, it is important to know what tax debts will and won't qualify.  Tax debts which do not qualify for discharge under this chapter include Trust Fund taxes such as payroll taxes, Trust Fund Recovery penalty, fraud penalties, and several other less usual types of taxes.  An existing tax lien will survive a Chapter 7 but can be collected only to the extent of the amount of equity in property at the time of filing Chapter 7.  The conditions for income tax are:

• The return due date must be at least three years before your bankruptcy filing date
• The return must have been filed at least two years before your bankruptcy filing date
• The tax must have been assessed at least 240 days before your bankruptcy filing date; 300 days for California income taxes 
• There must have been no willful attempt to evade paying taxes and the return must not be fraudulent
• After an IRS audit assessment, an amended return must be filed with the state.  The three year and two year conditions apply to the amended return's due date and filing date.

To ensure nothing is missed your tax discharge lawyer with our firm will obtain a printout of your Individual Master file tax transcript for each year which contains vital information that could affect your filing. 

In a Chapter 11, or Chapter 13 bankruptcy filing, a tax payment plan can be forced on the state or IRS by the court.  In some cases tax debts may be reduced by the court.  It may be possible to combine a Chapter 7 filing with another Chapter in order to fully resolve your tax matters.  However for specific questions applicable to your individual situation, you are wise to consult a skilled bankruptcy lawyer who will take the time to give you a full explanation.  Call the Law Offices of Joseph M. Tosti for a consultation.

Contact an Orange County discharge tax attorney at the firm who will assist you to eliminate and take control of your tax debts.