Discharging Tax Debt In Bankruptcy

Bankruptcy Attorney Dayton, Oh

A common assumption about the bankruptcy process is that it doesn’t discharge tax debts. While there is some level of accuracy to this, it isn’t entirely true. In fact, your Cincinnati bankruptcy attorney can explain the ins and outs of getting tax debts discharged in bankruptcy. Here are some basics behind the qualifications:

1. Must be income tax debt — only income tax debts are eligible for a discharge. Other taxes like property or payroll taxes in a business are not dischargeable.

2. Must be at least three years old — a tax debt can be dischargeable if it was due to be filed three or more year prior to the year you file for bankruptcy.

3. Must have a return that was filed two or more years ago — the filing date of the tax return is the measuring date for determining if the return is at least two years old.

4. Must have an assessment at least 240 days old — the debt must have been assessed by a taxing authority 240 days prior to the bankruptcy filing.

5. Must not  be the result of fraud or willful evasion — any tax debts that are suspected or confirmed to be accumulated through acts of fraud or tied to willful efforts to evade payment will not be eligible for a discharge in bankruptcy.

As you can see including tax debts in a bankruptcy can be confusing. Speak with your Cincinnati bankruptcy attorney beforehand to clarify the eligibility of your tax debts in bankruptcy.

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