This is a very common question that we are asked:
"Can Chapter 7 Bankruptcy discharge an individual's back taxes?"
Well Yes. And no.
The general rules:
- A Chapter 7, if properly filed, can discharge personal income related to 1040 taxes.
- A Chapter 7 can not discharge taxes that someone is personal liable as a result of the trust fund penalty (Form 6672) related to unpaid employer taxes.
Caveats:
- There time requirements and restrictions.
- And there are additional filing requirements.
We have seen bankruptcy really do wonders for some of our clients. If you are contemplating Bankruptcy, be sure your attorney has looked into whether or not your taxes can be discharged. If he or she is unfamiliar with what to look for, contact us. We can help.
