Are Tax Penalties Dischargeable in Bankruptcy?
King and King attorneys, 12/19/12
The government wants their tax revenue, and if you've ever been in debt to them you know how far they will go to get it. Back taxes can be a large burden, especially with interest and penalties. You can use bankruptcy to take care of debts to the IRS.
In general, outstanding tax debt that is less than 3 years old is not nondischargeable, as are tax debts where the debtor has engaged in some sort of deception such as failure to file returns, attempting to evade taxes, and failing to withhold employee taxes.
Now the IRS has some very detailed documentation on how bankruptcy can discharge tax debt. If you want to have a closer look, the IRS details can be found here. However the short answer is that you can use a chapter 13 bankruptcy to discharge your tax debt. If you have non-dischargeable tax debts, then you can use a chapter 13 bankruptcy to payoff your taxes. A chapter 13 bankruptcy allows you to payoff your taxes over 5 years.
If you’re considering filing bankruptcy and you want to include tax debt, you need an experienced bankruptcy attorney on your side. Call King and King for a free consultation at 404-524-6400
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