As a general rule taxes owed to the Federal and State taxing authorities are not dischargeable in bankruptcy. One exception to that rule is for “income tax” liabilities. If you meet the following rules, you can discharge Income Tax obligations:
- The tax is a personal Income Tax. [ie. not sales tax, not a withholding tax, etc];
- The Income Tax is owed for a period of more than 3 years prior to the date of the filing for Bankruptcy. [ie. 2006 Income taxes were due on April 15, 2007. Three years later, on April 16, 2010, those Income Taxes could become eligible to be discharged in a Bankruptcy;
- The Income Tax was owed for a return which had been in the hands of the taxing authority for more than 2 years prior to the date of the filing for Bankruptcy; and
- The Tax Return was a properly filed return. [ie. an accurate return]
If you meet the above rules, you may be able to discharge the Income Tax you owe.