The Dayton Bankruptcy Attorney: Tax Debt and Bankruptcy

Can Tax Debt Be Discharged in Bankruptcy?tax debt

Tax debt is not dischargeable in bankruptcy,” is the assumption of many people faced with looming delinquent notices, but luckily that assumption is not entirely correct and relief may be available.  Non-dischargeable tax debt includes debts for unpaid property taxes and any debts associated with unpaid income taxes, due in the 3 years immediately prior to filing bankruptcy.  So, if you are delinquent on income taxes or property taxes for the past year, you are out of luck.

However, if your tax debt meets the following criteria, it may be discharged in your Chapter 7 Bankruptcy:

  1. Solely income-based taxes;
  2. Payment was due for at least 3 years ago;
  3. Returns filed at least 2 years before bankruptcy filing;
  4. Taxes were assessed at least 240 days ago; and
  5. No fraudulent tax activities or willful evasion.