Comments on: Are IRS taxes dischargeable in bankruptcy?

By: Roger

Roger — Fri, 19 Dec 2008 03:51:40 +0000

I am considering filing a chapter 7 bankruptcy for taxes owed for 2002, 2003, and 2004. The taxes meet the requirements for discharge. I have a Federal Tax Lien recorded against me. Assuming that the tax liabilities are discharged through the bankruptcy what will happen to the lien? I own a property that has no equity that I want to reaffirm and keep. I would eventually like to sell the home in 5-10 years when value increases.

Thank You!

By: Darrin Mish

Darrin Mish — Tue, 25 Nov 2008 23:28:41 +0000

Mick,
The correct answer is that the three rule runs from the due date of the return (including extensions). What does that really mean? Well a tax year 2005 return is due on April 15, 2006. If you filed an extension to August or October then the three years begin to run from that extension date even if you file the return before the due. For example, it is February 2006 and you're thinking that you will need to file an extension because you are missing some documentation. So you file an extension to October of 2006. But you finally get the documentation, prepare the return and file on March 31, 2006. The three years begins to run starting October 16, 2006 because you requested the extension. The comment that the three years begins to run from December 31 is just wrong. I hope that answer helped.

By: Mick Wagner

Mick Wagner — Tue, 25 Nov 2008 22:39:57 +0000

I have a question about the three-year period to determine if taxes are dischargeable; does the time period run from the end of the tax year (i.e.: Dec 31/Jan 1), OR from the April 15th date when the taxes are actually due? I have gotten conflicting answers from attorneys, as well as from the IRS. Thanks.

By: Darrin Mish

Darrin Mish — Mon, 24 Nov 2008 21:36:28 +0000

Tom,

The earliest you will be able to discharge your tax debt is when the following three factors all apply:
1. The returns have been due more than three years (including extensions)
2. They have been filed more than 2 years.
3. The assessments are more than 240 days old.

By: Darrin Mish

Darrin Mish — Mon, 24 Nov 2008 21:34:40 +0000

You could use your credit cards to pay your irs debts and then later discharge those debts in bankruptcy but you can't set out with such a plan ahead of time. That's called bankruptcy fraud.

By: tom

tom — Fri, 21 Nov 2008 03:08:27 +0000

guess mine is pretty bad compared to everyone else, owed taxes from 1989- lets say 1994, didn't file got an installment agreement paid for i think 6 years stopped paying after 6 years i owed twice as much, after 6 years of paying ,did not file, 2000-2007 tax returns, now irs came to my door yesterday, 11/19/2008,and wants 2003-2007? don't get what happened to 2000-2002, anyway by 12/18/2008, to be in complience, so am i getting this right, 3 years from, 12/18/2008, which will be 12/18/11 i will be able to file bankrupcy on my taxes, also have a tax lien from the taxes i owed, do not own property but, lien filed with the county, will this all go away..even if i am sure i will have to sign another installment agreement.

By: Josh K

Josh K — Wed, 19 Nov 2008 06:57:06 +0000

Question: I know you can put your owed taxes on a credit card. But, at a later date, if you were to go bankrupt, can you discharge all of your credit card debt, including the taxes that were charged? I know my brother did this quite some time ago, but I didn't know if the laws changed or not.

By: Scott D

Scott D — Tue, 28 Oct 2008 16:32:46 +0000

I am in real estate and developement and over the past year have lost almost $250k. I previously had the money to pay 2006&07 taxes but have lost all of that and $50k in retirement just to keep our house and business. I am on a payment plan for 06 & just finished filing 07. The combined I owe on the 2 years is 65k without 08(which I will owe all the penalties from my retirement). I am not sure how I am going to pay these off considering how much I have lost and without any forseable income.
Question: If I negotiate a payment plan for all due taxes, will I give up my right to someday file bankrupcy? Or would I be better trying for an O&C?
Thanks

By: Michael P

Michael P — Mon, 13 Oct 2008 23:17:18 +0000

I filed for chapter 13 reorganazation in 5/2004. I will be discharged in 11/2009. This filing was not for back taxes. Just credit cards and other debts. I was recently audited by the IRS for all personal and business deductions for 2005 and 2006. Although I keep decent records I expect I will have to pay a large sum when the audit is done. I will also owe them for 2007 taxes just filed. My question is can this. I realize they can not collect on any determined back tax amount until I am discharged in 2009. However I have been getting misinformation about them accuring penalites and interest over the next year while I am still in bankruptcy. Can they access me, and if so for how much? Also can my Chapter 13 be ammended to add back taxes?
I also was charged interest of $2300 on 2007 back property taxes. Is that legal?

By: Darrin Mish

Darrin Mish — Wed, 17 Sep 2008 13:36:04 +0000

Cedric,
I'm sorry to report that your 2002 bankruptcy was too early to discharge your 1999, 2000 and 2001 income taxes. They were not due for three years by the time you filed. It would appear to me (without knowing more) that you would be liable for the $15,000.