Understanding The Tax Implications Of Bankruptcy
There are taxes (priority claims) that are not subject to discharge. These include those due within the three years before the bankruptcy. It also consists of those not assessable or unassessed at the time of the filing. Finally, it includes taxes accessed after completion of the bankruptcy.
If a trustee does not have money in the estate, a Chapter 7 filing will not discharge priority taxes.
A filer of Chapter 13 must pay these taxes in full through the restructuring. However, it allows the treatment of penalties to be nonpriority claims. The taxes will also not be subject to interest while the filing is ongoing. In addition, taxes will not be subject to post-filing interest should completion of the plan occur.
It is not allowable to discharge taxes for which there was no filing.
Should a late filing be more than a year out of the priority tax period, it must be on file for at least two years to discharge such tax in bankruptcy.
Demystify Tax Filings And Bankruptcy With Simkin & Associates
Schedule an introductory consultation with our experienced bankruptcy attorneys at Simkin & Associates to learn more about how bankruptcy can affect your tax filings. Email us or call our office in Los Angeles at 310-788-9089 to book a meeting.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.