Many times, taxes cannot be discharged in a bankruptcy; but that is not an absolute rule. Sometimes they can.
Federal or state taxes may be canceled by bankruptcies (both Chapter 7 and 13) under certain circumstances. There is a 3 year, 2 year, and 240 day rule that may apply.
Some taxes can only be discharged 3 or more years after their due date; some 2 or more years after; and some only if they were assessed 240 or more days before you file for bankruptcy.
Most taxes that fall under the 3-year, 2-year, or 240-day laws can be fully discharged in a Chapter 7 bankruptcy but may only be partially dischargeable under Chapter 13. Whatever can't be discharged under Chapter 13 would have to be paid back over 3 to 5 years as part of the overall payment plan.
It can be very complicated to determine ahead of time whether or not specific tax bills would be discharged should you file bankruptcy. But it is crucial to know this information ahead of time or filing could become an exercise in futility.
We at San Diego Bankruptcy Attorney have deep experience in the interrelations between bankruptcy and federal or state of California taxes. We know how to determine how taxes would be affected by a Chapter 7 or 13 bankruptcy and give you the detailed information necessary for you to make the right decision.
