Montgomery, AL Bankruptcy Attorneys Experienced with Past Due Income Tax Debt

Alabama Bankruptcy Law Firm Focuses on Dischargeable Tax Debt

Although most tax debts cannot be discharged in bankruptcy, there are circumstances when they can be wiped out.

Discharging Tax Debt in Chapter 7 Bankruptcy

You can sometimes discharge income tax debt in chapter 7 bankruptcy, but only if the tax debt meets the following conditions:

• The tax you owe is income tax, not payroll tax, sales tax, or fraud penalties, which are not dischargeable.
• You did not file a falsified tax return or otherwise willfully attempt to avoid paying taxes.
• The taxes were originally due at least three years before you filed for bankruptcy.
• You filed a tax return for the debt you wish to have discharged at least two years before filing for bankruptcy. Taxes are deemed filed when you mail them or if they are late, the date the IRS received the return.
• You can pass the “240-day rule,” meaning that the IRS must have evaluated the income tax debt a minimum of 240 days before the bankruptcy petition was filed.

Generally, interest on taxes is dischargeable if the initial tax meets the requirements for discharge, meaning that if your income taxes can be discharged, any interest that has accumulated will also be subject to discharge. If an even that gave rise to a tax penalty occurred over three years before the bankruptcy filing, the penalty may also be discharged in bankruptcy.

Taxes and Chapter 13 Bankruptcy

In many instances, you will also be able to discharge tax debt in chapter 13 bankruptcy. But if the tax is not dischargeable, you can repay the tax debt through the life of your chapter 13 repayment plan, which will typically extend from three to five years. During your chapter 13 bankruptcy case, you will be required to pay all current taxes as they come due.

Contact an Experienced Montgomery, AL Bankruptcy Attorney

If you have questions regarding dischargeable and non-dischargeable in bankruptcy, contact the Alabama bankruptcy lawyers with the Bond & Botes Law Offices online or call 1-877-581-3396 to get the information you need today.