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Can I discharge my tax debt in Chapter 13 bankruptcy?

On Behalf of | Nov 20, 2018 | Chapter 13 Bankruptcy, Firm News

Tax season can be a time of incredible stress if you do not have the funds to cover what you owe the government. As these bills grow, accumulating interest, you may find yourself at the bottom of an impossibly deep hole. Chapter 13 bankruptcy can usually help individuals in your situation, but you also need to determine if your tax debt is dischargeable through this process.

Federal income taxes are usually what come to mind first when talking about tax debts, but you could be struggling with many other types of taxes. For business owners these could include Florida state sales and employment taxes, and virtually anyone could find themselves on the hook for unpaid Social Security taxes or property taxes. Since Chapter 13 generally allows for a greater number and variety of debts to be discharged, it is a good option if you are dealing with multiple tax debts.

However, you may not be able to discharge all of your tax debts. In order to qualify as dischargeable, these debts must fit specific criteria. A tax debt is usually dischargeable if all of the following apply:

  • It is three or more years old
  • You filed returns on that specific tax at least two years prior
  • The tax was assessed at least 240 days before filing for bankruptcy
  • You did not engage in tax evasion or fraud

Even if some or all of your tax debts do not fit this criteria, you can still see benefits from Chapter 13 bankruptcy. This form of bankruptcy puts you on repayment plan that lasts anywhere from three to five years, and at the conclusion eligible debts are then discharged in full. In pursuing this process, you can achieve necessary relief that allows you to better focus on repaying any remaining debts. Still have questions about the bankruptcy process in Florida? Be sure to visit our website, where more information is readily available.

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