Chapter 7 and 13
A bankruptcy tax discharge is granted to a debtor by the bankruptcy court when the bankruptcy case is completed. A discharge order permanently prohibits the state and IRS, or any other entity, from taking any action to enforce collection of debts relieved under the bankruptcy code.
A discharge in Chapter 7 bankruptcies will not release a debtor if:
• Taxes became legally due and were owed within three years preceding bankruptcy.
• The debtor failed to file a return required by law.
• Taxes were assessed within 240 days, plus 30 days beyond the time a settlement offer was pending, preceding the date the petition was filed.
• Taxes were not assessed prior to bankruptcy by reason of a prohibition on assessment pending the exhaustion of administrative or judicial remedies available to the debtor.
• Taxes were based on a late filed return that was filed within two years before the petition filing date.
• The debtor made a false or fraudulent return, or willfully attempted in any manner to evade or defeat the tax.
The above is pretty stingy and you need a lawyer to help you get past the legal minefield.
A discharge in a Chapter 13 bankruptcy is dependent on a filed, approved, and completed plan. This takes about three years. For a free 30 minute analysis, please use the sidebar 24/7 Form under Office.
