They say there are two things unavoidable in life. Death and Taxes. But does that saying hold up when you file Bankruptcy? Can you discharge income taxes in bankruptcy?
Yes. You may discharge income taxes in Bankruptcy. However, there are a lot of requirements that must be met to discharge income taxes.
First, the taxes must have become due more than 3 years prior to filing the Bankruptcy case. Income taxes become due on April 15 th (unless an extension is granted). So 2014 income taxes were due on April 15, 2015. They would be just less than 3 years old. As a result, they would not yet be old enough to discharge. But the income taxes owed for prior years would be old enough.
Second, the income tax return was filed more than 2 years prior to filing the Bankruptcy case. So a late-filed income tax return could still satisfy this requirement.
Third, the income taxes were not assessed within 240 days of filing the Bankruptcy case. Income taxes are ordinarily assessed when the tax return is filed. However, the assessment date could be a later date if the IRS conducts an audit and determines that you owe more taxes.
You may obtain from the IRS the dates on which the income tax return was filed and the taxes were assessed. You may do so by requesting an “Account Transcript.” They may be requested online.
Fourth, the income taxes are not the result of a fraudulent tax return. You may fail this requirement by claiming a dependent you are not entitled to claim. You also may fail this requirement by claiming a deduction you are not entitled to claim.
If all of the eligibility requirements are met for filing a Bankruptcy case and you can satisfy all the above requirements, then you can discharge income taxes in a Bankruptcy case.
