Two of the most common creditors that debtors list on their bankruptcy petitions are the Internal Revenue Service (IRS) and State Revenue Departments for past Income taxes owed. While most taxes are priority claims, and non-dischargeable through a bankruptcy, some taxes can be discharged. Taxes are only eligible for discharge based on the year they were due and the time in which they were filed. Typically, any taxes owed that are over three years old are dischargeable. This three year time period is based on when the IRS requires taxes to be filed by (April 15th), unless the debtor was granted an extension from the IRS. This is also based on the tax year, not the year it currently is. So, in 2013, taxes that would be eligible for discharge after April 15th would be for years 2009 and earlier.
This rule only applies if the taxes were filed in a timely manner. If you have taxes owed from the year 2008, but didn’t file your 2008 taxes until 2010, those taxes would not be eligible for discharge. If taxes are not filed timely and are less than two years before the filing of the bankruptcy, the taxes cannot be discharged through the bankruptcy. If taxes are unable to be discharged through the bankruptcy, debtors must then contact the IRS (or State Department of Revenue if State Taxes are owed) to discuss and arrange a repayment plan.
If you are unsure about amounts owed to the IRS and/or amounts owed for each specific year, the IRS and State Revenue Department can provide you with copies of your past Income tax returns to assist you with finding this information. Even if you think your past income tax owed will not be dischargeable, it is important to list the IRS and State Revenue Department on your bankruptcy petition so that they will receive notice of your filing. While you are in an active bankruptcy case, the IRS and State Revenue Department will not be able to contact you for collections.
If you have questions about if your tax debt is dischargeable through a bankruptcy, contact a St. Louis Bankruptcy attorney today!