Asked in Debt and BankruptcyTaxes and Tax PreparationBankruptcy LawIncome Taxes
Does bankruptcy clear old income tax debts?
January 05, 2012 10:41PM
Yes, if the tax returns were filed when due or at least 3 years before the date of filing the bankruptcy. This is a complex area with a lot of exceptions or requirements to meet. Consult an experienced bankruptcy lawyer.
Some income taxes are dischargeable in bankruptcy, such as 1040 tax liabilities, however some will remain with the bankruptcy, for example, 941 payroll tax liabilities and trust fund. The tax code is complicated, taxpayer need a better understanding of tax code and bankruptcy laws to deal with a tax debt.