Does Bankruptcy Eliminate Back Taxes?

financial stress

If you are struggling with back taxes, you should contact our bankruptcy lawyer, who can discuss how a filing could help you eliminate your debt.

Most federal and state taxes are not dischargeable in bankruptcy. However, there are instances when you can discharge certain taxes through a Chapter 7 filing if you meet certain requirements. Among these criteria:

  • The debt is for income tax and not other forms of taxes like payroll or sales tax
  • The IRS or state you live in assessed the tax at least 240 days prior to your filing
  • Your tax return for the debt was filed at least two years prior to the bankruptcy filing
  • Your tax return for the debt was due at least three years prior to the bankruptcy filing

Keep in mind, taxes like FICA, used for purposes like Social Security, are non-dischargeable, as are taxes related to gifts and estates.

The Washington Post reported recently that Zane, a bestselling author who served as a producer on the movie “Addicted,” based on one of her books, filed for Chapter 7 bankruptcy in Maryland. The paper reported that the author listed her assets at more than $1.4 million and her debt at more than $3.4 million.

Zane reportedly owes more than $337,151.85 in back state taxes and more than $1.4 million to creditors. Additionally, she owes the IRS an “unknown” amount. Maryland Comptroller Peter Franchot reported that the state has been attempting to collect back taxes from Zane since 2003.

Should I Talk to a Bankruptcy Attorney About Back Taxes?

Speaking to our bankruptcy attorney is a great idea if you owe a significant amount in back taxes, even if you do not meet the requirements listed above.

Keep in mind, through a bankruptcy filing, an automatic stay goes into effect, stopping collection attempts. Additionally, you may be able to eliminate other forms of debt, like credit card debt and medical bills, freeing up money to pay back taxes.

In addition to a Chapter 7 bankruptcy, through a Chapter 13 bankruptcy, you may be able to enter into a repayment plan to pay back taxes. When you meet with our attorney, he can work with you to determine the best plan for you moving forward.

If your tax situation is spiraling out of control, contact our Washington DC and Maryland bankruptcy lawyer today for a consultation. You can also visit our Facebook page, our LinkedIn page, our Google+ page or our Twitter page.

Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney

Judd’s Judgment: During a bankruptcy case, you should pay any current taxes that may become due.


Related Posts
  • What Should I Do Before Filing for Bankruptcy? Read More
  • Reaffirmation Agreements in Bankruptcy Read More
  • What to Expect When Filing for Bankruptcy Read More
Free Initial Consultation with our Bankruptcy Lawyer Your Gateway to Financial Freedom.