Legal Question in Bankruptcy in Virginia

Dischargeability of Personal Property Taxes in Chapter 7?

In March of 2005 I filed for Chapter 7 personal bankruptcy (before new bankruptcy law took affect). My discharge was granted in July of 2005. Included in my debts were personal property taxes for 2003 owed to a county in Virginia on a vehicle that I owned. Now I have begun to receive menacing letters from the county tax agency saying I owe these taxes from 2003 with penalty and interest. I was informed by my bankruptcy attorney in 2005 that personal property taxes older than one year at the time of filing did not qualify for Eighth Priority status and were thus dischargeable. Was I misinformed? The county ''attorney'' insists that taxes are never dischargeable. Will I need to go back to the bankruptcy court to enforce my discharge? I appreciate your advice.


Asked on 2/27/08, 3:31 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Dischargeability of Personal Property Taxes in Chapter 7?

Property taxes are non-dischargeable if they are "last payable without penalty after one year before the date of the filing of the petition," or if a return was due and not filed, or if late was not filed within 2 years of filing the petition, or if there was a fraudulent return or willful evasion of the tax. Given that (at least in most parts of VA) there is no annual return due for cars (only when you buy or sell the car or move into the jurisdiction), the late or false return provisions would not normally apply, and the taxes would be dischargeable. However - such taxes are a lien on the car for which they are assessed, and while the county cannot collect from other assets or income, they can seize and sell the car to satisfy the taxes.

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Answered on 2/27/08, 4:29 pm


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