A Bankruptcy Lawyer in Hartford CT Discusses Discharging Tax Debts

by | Jul 2, 2024 | Legal

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One of the big myths about filing bankruptcy is that you can’t discharge your tax debts during the process. That simply isn’t true. If you meet certain qualifications, you can discharge some or all of your tax debt. A qualified bankruptcy lawyer in Hartford CT provides you with the following information that you should know about this topic.

Some Taxes Cannot be Eliminated
There are several types of taxes that people pay in the United States. When you’re thinking of discharging your tax debt through bankruptcy, there are only some taxes that you can discharge. Income taxes can sometimes be discharged depending on certain circumstances. However, payroll taxes and tax penalties are just a couple instances of tax-related debts that you can’t eliminate.

Tax Evasion or Fraud
In cases where the taxpayer either willfully evaded taxes or committed tax fraud, discharge through bankruptcy is not an option. Tax fraud can include putting false information on a form, using a fake Social Security number or failing to report some income. In cases like these, bankruptcy discharge simply isn’t an option for you.

Tax Debt is Three Years Old
If you want to discharge tax debt, it must be at least three years old. Also, you must have filed a tax return for that debt. As an example, if you want to discharge taxes that you owe for 2009, you must have filed your return for that year before it is eligible for bankruptcy. If you haven’t filed your returns that year, you can’t include it in the bankruptcy petition.

The 240 Day Rule
Another rule that qualifies your tax debt for discharge is if the IRS has assessed that tax at least 240 days before filing for bankruptcy. Or, in some cases, the IRS must not have assessed the tax yet as a result of suspended collection activity or due to an offer in compromise.

Other Guidelines
In addition to these guidelines, another thing your bankruptcy lawyer in Hartford CT wants you to know is that you have to prove that you have filed your taxes for the last four years. In order to be eligible for a Chapter 7 or Chapter 13 bankruptcy, these four years of tax returns must be filed before meeting with the creditors for the first time in your bankruptcy case. Also, you have to provide the court with a copy of your most recent tax returns along with your creditors if they ask for one.