Legal Question in Bankruptcy in Florida

The reason few people know the answer is because it is complicated.

There are very specific rules and limitations on the discharge of income taxes.

Income taxes can be discharged if all of the following conditions are met:

(1) The taxes are income taxes. Other taxes such as payroll taxes or fraud penalties, can never be eliminated in bankruptcy.

(2) You did not commit fraud or willful evasion. If you filed a fraudulent tax return or otherwise willfully attempted to evade paying taxes bankruptcy can't help.

(3) The debt is at least three years old. To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.

(4) You actually filed a tax return. You must have filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy.

(5) You pass the "240-day rule." The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. this time limit may be extended if the IRS suspended collection activity because of an offer in compromise or a previous bankruptcy filing.

Please also note that taxes for which a lien has been issued, no matter how old, must be treated as "secured debt", which usually means they must be paid in full.

I think the question you have relatesto the timing issue in item number 3. If all the other requirements have been met, your 2006 tax debt is potentially dischargeable in a case filed on or after April 16, 2010. That would be the first date that is more than three years after the tax originally became due.

Robert Wilcox

(904) 281-0700

Our office handles files a lot of bankruptcy cases. We offer a free initial consultation and would be happy to speak with you about the matter.