Helping You Move Forward Free Of Financial Problems

Back Taxes And Bankruptcy

Bankruptcy can be used to discharge or to manage repayment of back taxes, whether they are federal, state, or local taxes. 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.

Repayment Plans As Part Of A Chapter 13 Bankruptcy Filing

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 the repayment of taxes such as:

  • Income taxes
  • Employment taxes (Form 941)
  • Real estate taxes
  • Personal property taxes
  • 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.

Obtaining Approval On A Repayment Plan

Before the court will give consent to 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, contact us today by calling 540-627-6520 or filling out our online contact form. We maintain offices in Mechanicsville and Roanoke and serve people across Virginia.