Bankruptcy Information

Matthew Foley

Matthew Foley

Esq. & MBA

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Bankruptcy & Taxes

Tucson Arizona Tax Debt Attorneys

A Tucson, AZ tax debt attorney at the Law Offices of Matthew T. Foley, PLC, can provide you with reliable legal advice to help you pay outstanding tax bills. Call today to see if bankruptcy can help you wipe out tax debt altogether, or make the payment of taxes easier through a Chapter 13 reorganization plan.

Under both Chapter 7 and Chapter 13 of the Bankruptcy Code, income tax debts may be eligible for discharge. Under new bankruptcy laws, tax debts are now treated the same way in both Chapter 7 and Chapter 13 petitions. However, not all tax debts are capable of being discharged in bankruptcy court. The petitioner must have tax debts that meet five criteria for discharge. Bankruptcy laws lay out specific criteria for how old a tax debt should be if it is to be discharged.

Rules for Discharging Tax Debts

There are five rules to discharge tax debts and if the income tax debt meets all five of these rules, then it is dischargeable in both Chapter 7 and Chapter 13 petitions:

  1. Return due date at least three years ago – The tax debt must be related to a tax return that was due at least three years before the taxpayer files for bankruptcy.
  2. Return filed at least two years ago – The tax debt must be related to a tax return that was filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date the taxpayer filed the return.
    3. Tax assessment at least 240 days old – The IRS must assess the tax at least 240 days before the taxpayer files for bankruptcy.
    4. Tax return was not fraudulent – The tax return cannot be frivolous or fraudulent
    5. Taxpayer not guilty of tax evasion – That taxpayer cannot be guilty of any intentional act of evading the tax laws.

When an individual fails to file tax returns and then files for bankruptcy, those tax debts are not dischargeable. The bankruptcy petitioner is also required to prove that the four previous tax returns have been filed with the IRS before bankruptcy can be granted. These four previous tax returns must be filed on or before the date of the first creditors’ meeting. Bankruptcy petitioners must also provide a copy of their most recent tax return to the bankruptcy court.

Hire a Tucson Attorney to Understand Your Options

If you are contemplating filing bankruptcy and owe the federal government taxes, speak with an experienced Arizona bankruptcy attorney to find out whether bankruptcy is the best option in your situation.