Are you contemplating bankruptcy due to tax liability? If so, there are several things that you need to know about bankrupting taxes.
- Most bankruptcies are Chapter 7 and only 1040 personal income taxes may be discharged.
- Only 1040 taxes that are at least three years are be eligible for discharge.
- If the IRS has placed a lien on you or your property, you will not be able to discharge the amount of the lien because the lien will survive the bankruptcy.
- Business related taxes may be included in a Chapter 13, but avoiding including taxes in a Chapter 13. A bankruptcy under Chapter 13 is simply 3-5 years of payments to a trustee, and if you miss a payment your bankruptcy will be dismissed.