In Chapter 11 corporate-debtor reorganization cases, the bankruptcy court’s confirmation of the plan discharges most pre-confirmation debts. The IRS cannot assess or collect discharged pre-petition corporate income tax liabilities beyond what the court or plan determines is due.
Can taxes be discharged in Chapter 13?
In most cases, you cannot discharge (wipe out) tax debts in Chapter 13 bankruptcy. Instead, you repay your tax debts through the life of your Chapter 13 repayment plan, which could last either three or five years.
When do you have to discharge income tax?
Under these rules, you can discharge income taxes that came due three years before filing for bankruptcy, as long as it has been at least two years since you filed the tax forms and 240 days since the taxes were assessed. There are some exceptions, and these rules do not apply to other types of taxes, such as property taxes.
What kind of taxes can you discharge in bankruptcy?
Income taxes that you incur personally as a result of operating a business are dischargeable in bankruptcy under the 3-2-240 rules. However, different rules apply to other business-related taxes: Payroll Trust Fund Taxes. Trust fund taxes are not dischargeable in bankruptcy.
Can a priority tax debt be discharged in Chapter 7?
In Chapter 7, penalties and interest on priority tax debts are not dischargeable. Penalties and interest on priority tax debts in Chapter 13. All pre-petition penalties and post-petition interest are discharged in Chapter 13 if the debtor completes the Chapter 13 plan.
Can a tax lien be discharged in Chapter 7 bankruptcy?
Tax penalties more than three years old are dischargeable in both Chapter 7 and Chapter 13 bankruptcy unless the IRS or other taxing agency has secured the debt by filing a tax lien. (See tax lien section below for limitations on tax liens.) Discharging interest on back taxes.
