Experienced Real Estate And Business Attorney

Understanding The Tax Implications Of Bankruptcy

Taxes first due within three years of the bankruptcy and taxes assessed within 240 days of the bankruptcy, or which are unassessed but assessable when the case is filed, are priority claims that are not subject to discharge.

Priority taxes will survive a Chapter 7 discharge to the extent that the trustee does not have money in the estate to pay them.

In Chapter 13, such taxes must be paid in full through the plan; penalties associated with those taxes, however, can be treated as a nonpriority claim and paid a fraction along with other unsecured claims. In Chapter 13, the tax does not continue to incur interest during the case; if the plan is completed, no post-filing interest is due.

Taxes for which no return has been filed are not dischargeable in bankruptcy.

If a return was filed late, for a year outside of the priority tax period, the return must have been on file for two years for the tax to be discharged in bankruptcy.

Demystify Tax Filings And Bankruptcy With Simkin & Associates

Schedule an introductory consultation with the experienced bankruptcy attorneys of Simkin & Associates to learn more about how bankruptcy can affect your tax filings. Email us or call our office in Los Angeles to book: 310-788-9089.