People who are burdened with thousands of dollars worth of tax debt may feel there is no way to get out from under it. However, bankruptcy law does allow people to get rid of taxes they owe by filing Chapter 7 in Dayton OH. The debt must meet certain requirements and not all tax debt is dischargeable. Here’s more information about eliminating taxes using bankruptcy.
Requirements for Discharging Tax Debt
The only taxes eligible for a chapter 7 bankruptcy discharge are state and federal income taxes. Additionally, the taxes must meet a few minimum requirements before they can be written off. In particular:
1. Only taxes that were due 3 years or more before the date of the bankruptcy filing are eligible
2. The taxes must have been assessed by the tax agency at least 240 days before the bankruptcy filing date
3. The taxpayer must have filed a tax return for the past-due taxes at least 2 years before filing bankruptcy
For example, someone who wants to file bankruptcy in 2015 can only include tax debt that was due to be paid in 2012 or prior. The person must have filed a tax return for that year no later than 2013, and the tax authority must have assessed the person’s 2012 taxes by 2013. Certain activity, such as asking for an extension, may change the date the tax debt becomes eligible for discharge, so it’s a good idea to consult with a bankruptcy attorney to determine the exact date it’s possible to file for chapter 7 based on available information.
Non-Dischargeable Tax Debt
As noted previously, only state and federal income taxes are eligible for discharge. However, taxes that were involved in fraud schemes or where the person attempted to willfully evade paying them cannot be written off. Tax refunds or credits that were given by mistake, self-employment tax, and tax liens also cannot be discharged.
Every situation is unique, and there may be other requirements a person has to meet to get their tax debt discharged through a Chapter 7 in Dayton OH. Working with a bankruptcy attorney is a good way to ensure the rules are properly followed to obtain the desired outcome.