Sunday, March 03, 2013

Are taxes dischargeable in a chapter 7 personal bankruptcy filing?

Trust fund taxes and sales taxes are not dischargeable in bankruptcy. However, federal and state income taxes that meet the following criteria are: 1. The tax year in question is more than 3 years prior to the filing the bankruptcy, 2. the tax has been assessed more than 240 days prior to the bankruptcy, 3. the tax return for the year in question was filed at least more than two years prior the bankruptcy and 4. the tax return is non-fraudulent and there is no showing of willful evasion of payment of a the tax. Discharging taxes in bankruptcy is technical and complex and James H. Shenwick has an LLM in Taxation from New York University Law School and he has discharged many taxes for clients in personal bankruptcy filings. The starting point to determine if taxes are dischargeable in personal bankruptcy is the review of a clients tax transcript which is obtained from the IRS.

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