Bankruptcy laws are created by the government, so it should be no surprise that when you owe the government money, the rules for discharging debts can be a lot tougher. However, you do have options for dealing with unpaid taxes in bankruptcy.
At John T. Turco & Associates in Omaha, we will help you understand the implications of bankruptcy for your tax debts.
Examining Your Tax Debts to Determine Your Options
It is an urban legend that you simply cannot do anything about unpaid taxes in bankruptcy. The bankruptcy laws for taxes are very intricate and depend on many aspects of your financial situation. Below are just a few broad generalizations about certain types of tax debt.
- Federal income taxes: If these are more than three years old, they can usually be discharged in bankruptcy. If not, you can pay them back over the course of three to five years with no interest or penalties in Chapter 13 bankruptcy.
- Property taxes: If you are planning to give up your house as part of your bankruptcy proceedings, you will not be liable for any unpaid real estate taxes.
- Employment taxes: If you are a business owner and owe back payroll taxes on your employees, these generally cannot be discharged in bankruptcy. However, there may be some exceptions.
It may also be important to know that if you owe enough unpaid taxes, you will qualify for Chapter 7 bankruptcy, even if you would not otherwise pass the means test under that chapter.
Carefully Planning to Avoid Unpleasant Surprises
There are many “gotchas” involved in filing for bankruptcy when you have tax debts. For instance, if you filed for an extension on your taxes, or if you did not file an accurate tax return on time, your ability to discharge your tax debts could be affected.
Failing to take all the intricacies of the law into account could result in unexpected outcomes. Our attorneys are devoted to carefully examining all of the issues before filing bankruptcy. We will get your transcripts from the IRS and assemble all the other documents we need to understand the best ways to approach your tax debts.
We can help. Contact us to speak to one of our experienced bankruptcy lawyers or to arrange a free initial consultation. If you cannot come to our Omaha offices, we can consult with you by telephone.