Home > Legal > Questions & Answers > Bankruptcy / Debt > If you file chpt 13 with outstanding taxes that are 3 years or older are the taxes wiped clean with no proof of claim by irs?
If you file chpt 13 with outstanding taxes that are 3 years or older are the taxes wiped clean with no proof of claim by irs?
Like most legal questions, the answer has to begin with "it depends", because the information provided in you question is not sufficient for a definitive answer. I can answer your question in a general sense, and I will make an assumption that your question relates to personal income taxes that you owe; and that there is no dispute as to the amount or the application of the tax code to the facts of your case. Fair enough?
In Ch 13 cases, priority taxes are those which first came due within 3 years of filing your petition, or which were assessed within 240 days of filing. These taxes will not likely be discharged.
Taxes which are older than priority cases may be discharged. Note that this depends on you having filed a return of tax for the years in question. Also, regardless of whether the underlying taxes are discharged, the bankruptcy court may discharge penalties and interest, or at least reduce the amount included in you Ch. 13 plan to pennies on the dollar.
It is important to get this right. I would recommend that you consult with your bankruptcy attorney. If you "self filed" your petition, getting the correct information into your case and to the trustee is probably worth the expense of hiring a tax attorney or bankruptcy attorney.
I agree with attorney Lowrey. The IRS does not give you a heads up on this either. They just sit and wait until it is too late, and you realize the taxes are not discharged. So be careful and get competent advise in this situation.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this posting provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this posting cannot be used to eliminate penalties with the IRS or any other governmental agency.
It depends on when the taxes were assessed. If you filed timely, and the taxes are more than three years old and are NOT payroll taxes, you can generally get them discharged. However, 'assessed' means that you have filed the return, or gotten a notice for additional taxes due. It does not mean that the IRS has prepared a substitute return for you and sent you a bill. 'Assessed' begins on the day you file the return - thus if you don't file your 2005 return until 2009, it has not been 3 years, and they cannot be discharged.
