It is tax season. My clients (and myself) are trying to find ways to pay the taxes that they owe to the IRS and State Franchise Tax Board. Paying your taxes with a credit card may seem like a good idea. And in some cases it may indeed be a clever way to deal with the tax debt. But it does not always accomplish what you may think, at least not from a bankruptcy perspective. Before I get into that, [...]
Tax Returns Must Be Filed In Order To Be Discharged In A Bankruptcy Case Income tax debts can be discharged in bankruptcy. But not all of them. There are rules. Lots of them. One of the rules is that the taxes must be at least 3 years old. This is measured from the date the tax return was last due to be filed. Another rule is that the taxes must be assessed more than 240 days prior to filing bankruptcy. [...]
You can eliminate (discharge) sales tax obligations in bankruptcy if certain criteria are met. In California, sellers are required to pay sales taxes to the State Board of Equalization ("SBOE") now the California Department of Tax and Fee Administration (CDTFA) based on receipts from sales. On July 1, 2017 the State Board of Equalization became the California Department of Tax and Fee Administration (CDTFA). Many bankruptcy attorneys (and others) believe that sales taxes in California can never be discharged. This [...]
ALWAYS FILE YOUR TAX RETURNS ON TIME, even if you cannot pay the taxes you owe. Those of you who read my posts know that certain tax debts are dischargeable in bankruptcy. The basic (but definitely not all) requirements for discharge of income taxes are: The bankruptcy case must be filed more than 3 years after the last date in which the tax returns were due for a given tax year; It must be at least 2 years since the [...]
Bankruptcy and Non-Bankruptcy Alternatives For Different Types of Debts There are many different kinds of debts and bills. There are mortgage, credit card, taxes, student loans, payday loans, alimony, child support, as well as debts that might come from negligence or other actions, and many more. People who find themselves unable to pay their debts are often confused about their options. Not unexpectedly, the options vary depending on a number of factors. I have divided the different options into two main [...]
Certain taxes may no longer be dischargeable in certain bankruptcy courts if the returns were filed late.
If your bank suddenly wipes out your mortgage, is that a good thing, or will you end up with a huge tax liability?
Normally forgiven debts can become taxable income, but not in bankruptcy. Find out why.
Do you have to pay taxes on debts discharged in bankruptcy? How do you handle your tax returns after a bankruptcy?