You may have heard that you cannot discharge certain debts in bankruptcy, like student loans or back taxes. While there is some partial truth to this concept, the truth is that both are dischargeable if certain stipulations are met. For unpaid tax debts, you may be eligible to include them in your bankruptcy case if:
1. The taxes are income taxes – taxes like payroll and property taxes cannot be discharged in bankruptcy.
2. The tax debt is at least three years old – unpaid taxes that were due in the time prior to three years from the time of your filing are not eligible.
3. The tax debt has a return on file with the IRS – if you did not file a tax return on the year of your debt, your taxes may not be eligible for a discharge.
4. The tax debt passes the “240-day rule” – the debts must have been assessed by the IRS at least 240 days prior to your filing.
5. The tax debt is not associated with fraud or evasion – if you filed a fraudulent return or have attempted to evade payment, the tax debt is not eligible for a discharge.
Including a tax debt in bankruptcy can be tricky, which is why you need the guidance of a Louisville bankruptcy attorney. Your attorney can help you determine if your tax debts are eligible, and which bankruptcy chapter may best resolve your unpaid taxes.