Taxes were due prior to filing. They are discharged right?

The answer is, it depends. Taxes and their dischargeability depend on the type of taxes, what tax year they are form, when they were filed, when they were assessed and whether they are now secured by any real estate.

We will discuss the most typical type of taxes that Debtors want to discharge. That is state and/or federal income taxes. In order to taxes to be discharged they must meet the following criteria:

  • Taxes must be for a year that is atleast 3 taxes years ago from prior the date the bankruptcy is filed; AND
    • Example: The bankruptcy is filed on August 1 2013. The 3 tax years that were due at the time of filing are 2012, 2011 and 2010. This means that any debt owed for those years is not discharged. However, Tax years 2009 and prior can be discharged through the bankruptcy IF it meets the remaining criteria detailed below.
  • Taxes must have actually been filed atleast 2 taxes years ago from prior the date the bankruptcy is filed; AND
    • Example: The bankruptcy is again filed on August 1, 2013. The taxes that are owed are for 2008 meaning that they pass the test above in that they were filed more than 3 tax years ago as of the date the bankruptcy was filed. So now we look to when the taxes were actually filed. In our example we will say the taxes were actually filed on July 10, 2011. Given that July 10, 2011 is more than 2 years prior to the date the case was filed, the taxes are eligible to be discharged through bankruptcy IF it meets the remaining criteria detailed below.
  • Taxes must have actually been filed atleast 180 days ago from prior the date the bankruptcy is filed; AND
    • Example: Example: The bankruptcy is again filed on August 1, 2013. The taxes were for tax year 2008, they were actually filed July 10, 2011 and were assessed December 15, 2011. Given that they meet the criteria above and they were assessed more than 180 days prior to the date the bankruptcy was filed, the taxes are eligible to be discharged through bankruptcy IF it meets the remaining criteria detailed below.
  • There must not already be a lien placed on your property, real estate or otherwise.
    • Even if the taxes meet all the criteria above, if there is a lien against your real estate the debt cannot be discharged through a bankruptcy.