Bankruptcy and Tax Debt

Everyone has heard of the two certainties in life: death and taxes. However, owing taxes to the government isn't a death sentence. Under the right circumstances, the government is just like any other creditor. Both federal and state income taxes may be dischargeable in bankruptcy.

Bankruptcy can eliminate both federal and state income taxes. Contact Wisconsin bankruptcy attorney Timothy J. Helbing at 920-659-5606 to discuss if the circumstances allow for a discharge of your federal and state income taxes.

Conditions Necessary for Discharge of Income Taxes

Not all income tax debt is dischargeable. Certain conditions must be met before your income taxes will be dischargeable, which include:

The age of the taxes

The income tax debt must be related to a return that was due at least three years prior to the bankruptcy filing. This includes all tax extensions.

The tax return must have been filed

For the income taxes to be dischargeable, the tax return must have been filed with the appropriate agency at least two years before the debtor files for bankruptcy. This period is based upon the actual date of the tax filing.

Assessment

The taxing agency must assess the tax a minimum of 240 days prior to the debtor filing for bankruptcy. An assessment takes various forms, such as a proposed assessment becoming final, a final determination from and audit, or even a self-reported balance due.

No fraud involved

The tax return cannot be fraudulent or frivolous.

No tax evasion found

The debtor cannot have been found guilty of tax evasion.

Are other types of taxes dischargeable?

Taxes take many different forms, i.e. property taxes, excise taxes, sales taxes, and "trust fund" taxes. In certain situations, other types of taxes may be dealt with in the bankruptcy. Tax debt analysis is extremely tricky and the only way to correctly determine if taxes are dischargeable is to have an experienced bankruptcy attorney analyze your situation.

Contact Us

For more information, or to schedule an appointment with an experienced bankruptcy attorney to determine if your tax debt is dischargeable in bankruptcy, please contact Appleton and Oshkosh bankruptcy attorney, Timothy J. Helbing.