Bankruptcy: Can My Taxes Be Discharged?

Can Taxes owed to state or federal entities be discharged in bankruptcy? Well that depends. The bankruptcy code outlines what taxes may be discharged. For a brief overview, there are six requirements (you must meet all six requirements):

1. THREE YEAR RULE: The three year rule: for the tax year in question, the most recent due date for filing the return is more than three years old;
2. TWO YEAR RULE: A tax return has been filed at least two years preceding the filing date of the bankruptcy;
3. TWO HUNDRED AND FORTY DAY RULE: The tax claim was assessed at least more than 240 days preceding the filing date of the bankruptcy;
4. TAX IS ASSESSABLE BUT NOT YET ASSESSED;
5. NON-FRAUDULENT RETURN; and
6. NO WILLFUL TAX EVASION.

Obviously, the above is only a preliminary test to see if you need to look further to see is a tax due to a state or federal entity may be discharged. If you think taxes you owe might be dischargeable, you should seek the advise of a bankruptcy attorney.