Bankruptcy and Taxes

I owe taxes.  Can filing bankruptcy help me?

Generally, tax debts are not dischargeable in bankruptcy. However, in law, there are always exceptions to the rule.

If a tax debt is more than ten years old and the Internal Revenue Services has made no attempt to collect it, the tax debt will be barred by the Statute of Limitations and will no longer be collectable.

However, if the tax debt is not more than ten years old, or the Internal Revenue Services has made attempts to collect the tax debt, the Statute of Limitations will not apply.  In this case, a Debtor might want to consider consulting with his or her CPA and a bankruptcy attorney to determine whether the tax debt is dischargeable in bankruptcy.

For a tax debt to be dischargeable in bankruptcy, it must meet the following conditions: 1) more than three years have passed sine the debt was due; 2) more that two years have passed since the Debtor actually filed the return; 3) more that 240 days have passed since the Internal Revenue Service assessed the amount of the tax debt that was due; 4) the Debtor did not willfully evade paying taxes; and 5) the Debtor did not file a fraudulent return.

If all five of the requirements are met, the tax debt may be dischargeable in bankruptcy.

The interplay between tax law and bankruptcy is complicated. The Law Offices of Alice Vacek Aranda PLLC does not specialize in tax law but will be able to file a bankruptcy once a tax specialist has made a determination that the tax debt is dischargeable. The Law Offices of Alice Vacek Aranda PLLC offers a free one half hour consultation. This is a good place to begin.


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