Income taxes are dischargeable in bankruptcy if they are for a tax year more than three years ago and you’ve had the tax return filed for at least two years prior to the date of filing. There are some other rules I won’t bore you with. I’ll bore you with a lot of things probably, but not this right now.
A tax case requires that I get your tax transcripts to make sure all the requirements of tax dischargeability have been met prior to our target filing date. If those are met, then your income taxes are discharged.
The reason the government is letting you discharge your taxes is because you’re insolvent and trying to collect old taxes will just keep them from collecting future taxes, as you’re not made out of money, and the old taxes have doubled, trebled or more due to the interest and penalties tacked on. So paying them is unrealistic in the case of bankruptcy.
Top 10 Myths About Bankruptcy
- Debt consolidation is as good as bankruptcy
- Everyone will know you filed bankruptcy
- You will never get credit again
- Filing bankruptcy will hurt your credit for 10 years
- Only deadbeats file for bankruptcy
- Your property will be sold by the bankruptcy trustee
- You have to hide assets to file bankruptcy
- It is expensive to file bankruptcy
- It is hard to qualify to file bankruptcy
- Taxes are not dischargeable in bankruptcy
