An individual’s tax debt may be dealt with both inside and outside of bankruptcy.
Depending on the type of debt, the filing of a bankruptcy petition may relieve an individual of some or all of a tax obligation. Certain taxes are not dischargeable in bankruptcy, while others might be. For example, certain income taxes may be dischargeable if they were incurred within a certain time window prior to a bankruptcy filing, if tax returns were properly filed (under certain circumstances, even if the returns were filed late). Certain other types of taxes are not dischargeable in bankruptcy, such as taxes that are deemed to be “trust fund taxes” (payroll taxes, sales/use taxes, etc.). While a bankruptcy can sometimes resolve certain tax obligations, non-bankruptcy options may be available as well. An individual may deal directly with the taxing authority in order to negotiate a manageable resolution or a repayment plan. Under some circumstances, the tax obligation might be reduced by an agreement reached with the taxing authority. Prior to determining the best course of action, our attorneys will perform a thorough analysis of the taxpayer’s financial and tax situation.