Personal Bankruptcy Chapter 7 and Federal Taxes
- Thread Starter dadpups
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The simple answer, from my understanding, is that Chapter 7 will discharge federal taxes if:
(1) they are income taxes (2) there was no fraud or willful evasion (3) the return was due originally no less than 3 years before filing for bankruptcy (4) the return was filed no less than two years prior to the filing of the bankruptcy, and (5) the tax was assessed no less than 240 days prior to the filing of the bankruptcy or it has not yet been assessed. Will provide source if you need it.
more details...
Thanks you for your help. Here is what my lawyer wrote me. This seems to differ from your reply. Can you help me.
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I see on Schedule J you listed $600 per month that you were paying to the IRS for personal propertyand past due income taxes. Without this payment your petition would not have been granted since your income would have been too high relative to expenses and you would have been forced into chapter 13 instead of chapter 7. Also, once you enter into an agreement with the IRS this is a contract, and the three year rule concerning discharge for back taxes would not apply. That was why the $20,000 debt was not scheduled.
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Thanks you for your help. Here is what my lawyer wrote me. This seems to differ from your reply. Can you help me.
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I see on Schedule J you listed $600 per month that you were paying to the IRS for personal propertyand past due income taxes. Without this payment your petition would not have been granted since your income would have been too high relative to expenses and you would have been forced into chapter 13 instead of chapter 7. Also, once you enter into an agreement with the IRS this is a contract, and the three year rule concerning discharge for back taxes would not apply. That was why the $20,000 debt was not scheduled.
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Re: more details...
It seems that your attorney is stating the entire 3 year rule does not apply because by making a payment to the IRS in the manner you did it is considered entering into a contract or an agreement with the IRS and the terms of the agreement are used and the general rule does not apply. I'd ask the attorney to explain it to you and not rely on the general answer provided here.
Actually, I don't think it does differ and you have to understand that your attorney has had the benefit of a full and complete evaluation of your case by reviewing your paperwork. You cannot expect anyone here to provide a generic answer with limited information. This is especially unfair to the attorney who is being second guessed with general statements and your case may very well differ -- and it seems to be the case here.
It seems that your attorney is stating the entire 3 year rule does not apply because by making a payment to the IRS in the manner you did it is considered entering into a contract or an agreement with the IRS and the terms of the agreement are used and the general rule does not apply. I'd ask the attorney to explain it to you and not rely on the general answer provided here.
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