Taxes can be a tricky subject when it comes to bankruptcy, simply because there are so many different kinds of taxes in general. While certain types of taxes can be discharged in a bankruptcy case, not all of them can. Even the ones that can be discharged must adhere to strict guidelines. It takes an experienced bankruptcy attorney to make sure that the laws and the taxes align so that all of the debt in your bankruptcy has a better chance of being discharged. Otherwise, they may not be included in the bankruptcy. Even worse, if they are not included and your bankruptcy is discharged, the government will see that your debt is reduced and may not be as flexible as they otherwise would have been when setting up payment arrangements and so forth. Click here to read more about how bankruptcy affects taxes.
Timelines and Taxes Regarding Bankruptcy
Income taxes are the most common taxes that appear in bankruptcy court, but don’t expect to file your taxes today and then file bankruptcy tomorrow. There are strict laws involving timelines and when income taxes can be included. These laws are known as the 3/2/240 laws and are named accordingly, as you can see below.
- 3-Year Law: The 3-year law states that your taxes were due no less than three years before you filed bankruptcy. Note that not having filed taxes in the last three years doesn’t mean you won’t owe a tax bill after your bankruptcy is discharged. Check your due date on your taxes to be sure that you are using the correct date. Extensions and other agreements might change the due date, so be sure to double-check and let your lawyer know the dates in question.
- 2-year Law: The 2-year law states that your taxes must have been filed no less than two years before you filed bankruptcy. Note that the filing date and the due date are completely different dates. The due date here is irrelevant. The day that you filed is what’s important. This date will have changed if you filed an amendment or otherwise modified your filing date.
- 240-Day Law: The 240-day law states that your income taxes must have been assessed no less than 240 days before you file bankruptcy. Again, this is different from their being due or being filed. It doesn’t matter when you have filed them or when they are due, but when they are assessed. This date can change if you are asked to modify your returns.
Why You Need Experienced Florida Bankruptcy Attorneys
One reason that it is important to use a lawyer who has experience not just with bankruptcy, but also with income taxes as they apply to bankruptcy, is that the dates vary by rule and other details. For example, a payment arrangement won’t have the impact on your due dates and terms that an extension would because the extension moves your due date forward. A payment arrangement simply breaks your payments into manageable amounts and may include fees and interest. Our experienced bankruptcy attorneys will know exactly which dates and rules to go by for your situation.
As you can see, including debts such as income tax obligations in a bankruptcy can be complicated. Don’t risk making a mistake by not including debt that you may be able to discharge. Choose experienced bankruptcy lawyers who can help you move forward in the best way possible. Click here for more information about our bankruptcy attorneys.