Discharging Taxes in Bankruptcy

 

Contrary to what you may have heard, most taxes can be discharged in Bankruptcy.  There are some exceptions like payroll "trust fund" liabilities and fraud assessments, but as general rule, income taxes and sales taxes can be discharged provided that the taxes are old enough and some type of return was filed. Our Principal, Eric M. Nixdorf, is a Certified Bankruptcy Specialist and recognized expert on the dischargeability of income taxes treatment of tax liens in bankruptcy cases.  

 

Bankruptcy can be really effective if there are ongoing tax levies or liens in place, there is a dispute over the amount of taxes owed, and/or a client is able to pay the taxes owed over time but has other debts and/or the IRS or State requires a much higher monthly payment than the client can afford.  A Chapter 13 bankruptcy can be especially effective for clients who own real estate encumbered by tax lien as the bankruptcy code generally allows the liens to be valued and then "stripped off" so that if the property later appreciates the client realizes the gain.

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Bankruptcy is complex and has its own set of legal rules and procedures.  Therefore, it is generally not a good idea to try to handle it yourself or hire an attorney who does not have bankruptcy expertise. The good news is that attorney fees for bankruptcy cases are probably the most affordable legal fees you will see relative to the results you can achieve.  If you are contemplating bankruptcy for your taxes and other debts, please give us a call so we can take a look at your situation and see if it is right for you.