Back Taxes

Bankruptcy can be used to discharge or to manage repayment of back taxes, whether federal, state or local. Some taxes can be permanently discharged under either Chapter 7 or Chapter 13 of the Bankruptcy Code. Generally, state and federal income taxes for years more than three years past may be dischargeable if returns have been timely filed. Older personal property taxes may also be discharged. Taxes that cannot be discharged can be repaid without penalty or further interest under a Chapter 13 Plan, which can spread repayment out for up to five years. Importantly, the requirements of the Bankruptcy Code, and not the IRS, determine the monthly payment under the Plan. Chapter 13 can be used to control repayment of income taxes, employment taxes (Form 941), real estate taxes, personal property taxes, even sales and meals taxes. You are protected from the taxing authority as soon as the bankruptcy is filed. Regardless of the kind of tax or the amount owed, the government must stop all collection activity immediately when the bankruptcy is filed. Wage and account levies are stopped. Liens cannot be filed after the petition. Even the threatening letters come to a quick end. However, to obtain approval of a Chapter 13 Plan, all unfiled returns must be prepared and filed. You should consult your attorney about the right way to file missing returns. If you owe back taxes, consult your bankruptcy attorney immediately. The information on this page is just an overview. Your attorney can help you with the specific steps needed to obtain protection and relief from back tax debt. Please Contact Us today to schedule a free initial consultation to discuss how bankruptcy may be used to help you discharge and manage repayment of back taxes.