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I see Federal taxes are excluded in bankruptcy. What about State income taxes?

Palm Coast, FL |

I owe personal State income taxes from 1998 and 1999 in Delaware. (I just accidentally found that out after checking my Credit score) I was granted Chapter 7 or 11 bankruptcy in NJ in the early 2000's (maybe 2004). Would that bankruptcy action have erased this debt or is it excluded like Federal taxes?

Attorney Answers 3

Posted

Short answer, the same bankruptcy rules apply to state income taxes as do federal income taxes.

As to your specific situation, you would need a retroactive tax discharge analysis to figure out where you stand.

I happen to offer such a service to both attorneys and non-attorneys. See the link below.

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2 comments

Matthew Scott Berkus

Matthew Scott Berkus

Posted

P.S. You can discharge federal income taxes in bankruptcy. The taxes need to qualify for discharge. Despite popular myth, federal income tax can eliminated in bankruptcy.

Gary D. Bollinger

Gary D. Bollinger

Posted

Matthew, I did a cursory review of your site: I am impressed!

Posted

It is not possible to answer your question without the following information: for what tax year are the taxes; what type of taxes are they (income, withholding, excise, sales, etc...); when did you file a return; was a substitute for return prepared and filed for you by the taxing authority; what was the date of your bankruptcy filing? If you can determine the relevant data, then you can read section 507(a)(8) and 726 of the Code to determine dischargeability. You will not get that level of detail answered in this forum for free.

Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.

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Posted

Discharging taxes is a more complicated analysis as my colleague pointed out. You would really need to consult with a knowledgeable bankruptcy attorney to do that properly. As a general matter, if you did not timely file your returns and the taxing authority filed a substitute return, it will not be dischargeable. Again, you really need to seek counsel on this. Good luck.

This answer is for informational purposes only and is not intended as legal advice or to create an attorney-client relationship.

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