Bankruptcy will not eliminate an income tax debt if you didn’t file a tax return or intentionally avoided your tax obligation. Tax returns filed by the IRS on your behalf do not count as a filed tax return required to discharge the tax debt.
You should be able to get rid of income tax debt as long as you:
- Filed your tax return for the tax year or years that you want to eliminate at least two years prior to your filing bankruptcy;
- The tax return that you are trying to eliminate was due at least three years before you filed for bankruptcy;
- The IRS has not assessed your liability for the taxes within 240 days before you filed for bankruptcy;
- You didn’t willfully attempt to avoid paying your taxes;
Property taxes can be discharged only if they were due more than a year before you file for bankruptcy. But even if your personal liability to pay the property tax is eliminated, the governmental taxing authority will still have a lien on your property for those taxes.
That means, even if you don’t have to pay the property tax now, before you can sell your home, you are going to have to settle up.
To learn more about whether or not Chapter 7 bankruptcy or Chapter 13 bankruptcy is your best option, schedule your free, confidential bankruptcy consultation with a Colorado bankruptcy attorney today. Our online scheduling system allows you to schedule bankruptcy consultation at a time that is convenient for you.
Colorado Bankruptcy Law Group, LLC is a personal bankruptcy firm serving clients in the greater Denver area.