One of the most useful benefits of filing bankruptcy is that a debtor may discharge taxes. Analyzing whether a debtor’s situation related to delinquent, unpaid taxes meets the requirements for dischargeability in a bankruptcy case typically requires the assistance of a bankruptcy professional. Theron Morrison and the Morrison Law Group have provided such assistance to thousands of bankruptcy debtors.
A discharge releases a bankruptcy filer, i.e., debtor, from personal liability for certain types of debts as specified by federal law. A bankruptcy filer is not required to pay any debts that are discharged in a bankruptcy case. A bankruptcy discharge is a permanent order that prohibits creditors from taking any form of collection action on debts discharged in a bankruptcy case. These collection efforts include legal action and all personal, telephonic, and electronic communications with the debtor.
The following is a list of the requirements for discharging taxes in a bankruptcy case. An experienced bankruptcy attorney will always be more than helpful when determining whether a prospective bankruptcy filer has met the requirements.
- The Three-Year Rule
Any taxes must have become due at least three years prior to the debtor filing his or her bankruptcy case. The earliest date that a bankruptcy case may be filed to discharge any delinquent tax obligations may be determined by adding three years to the date the taxes were due.
- The Two-Year Rule
A bankruptcy debtor must file his or her returns to discharge taxes. Late-filed taxes may be discharged in a bankruptcy case if a debtor’s returns were filed at least two years before the case was filed.
- The 240-Day Rule
It is important for a bankruptcy debtor to determine the date that his or her delinquent taxes were assessed, which is typically on or near the date that a tax form is filed. The taxes are dischargeable if they were not assessed; or if assessed at least 240 days before the bankruptcy case is filed.
- Income Taxes
These rules or requirements apply only to discharging federal, state, and local income taxes. They do not apply to other types of taxes such as property or sales taxes.
The Morrison Law Group can help if you owe back taxes. We can help in any situation where creditors are placing unwanted pressure on your life. The Morrison Law Group can help if you just need to talk about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, Orem, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.