Bankruptcy Considerations

A common misconception in the world of tax resolution is that Tax Debts are not dischargable in bankruptcy. This is not true. However, it is also not simple.

The determination about whether or not tax debt can be discharged (or liens stripped) in a bankruptcy is not one that you should try and determine on your own, and – if you hire a bankruptcy attorney who is not familiar with the ins-and-outs of the tax code and the bankruptcy code, things could get ugly.

There are three BASIC considerations when determining whether or not a tax debt is going to be dischargable in a Chapter 7 bankruptcy:

  1. Was the tax return due more than 3 years ago (plus extensions)?
  2. Was the tax return filed by the taxpayer more than 2 years ago?
  3. Was the tax assessed more than 240 days ago?

But seriously, these considerations are BASIC. Several other issues come into play. Consult a professional.