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Chapter 13 bankruptcy and tax debt

December 24, 2009

Under the new bankruptcy laws, tax debt is treated the same way for both Chapter 13 and Chapter 7 bankruptcy.

In order for a tax debt to be discharged under Chapter 13 bankruptcy, five specific criteria must be met:

  1. The tax return was due at least three years ago: The due date for the return must be at least three years before the bankruptcy petition was filed.
  2. The tax return was filed at least two years ago: The return must have been filed a minimum of two years before the bankruptcy petition was filed.
  3. The tax assessment is at least 240 days old: The IRS must have assessed the tax a minimum of 240 days before the bankruptcy petition was filed.
  4. The tax return was not fraudulent: The return must not be frivolous or fraudulent.
  5. The tax payer did not commit tax evasion: The bankruptcy petitioner must not be guilty of evading tax laws.

Note also that before a Chapter 13 bankruptcy will be granted, the petitioner must prove that they filed their four previous tax returns with the IRS. The petitioner must also provide the bankruptcy court with a copy of their last tax return.

For free legal advice about Chapter 13 bankruptcy, contact the Texas bankruptcy lawyers of Fears | Nachawati today. Simply email us or phone us toll free at 1.866.705.7584.


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