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Understanding Tax Debt – Debt Relief in Lebanon Missouri

Understanding Tax Debt - Debt Relief in Lebanon Missouri

Tax Debt

There are many types of taxes for which individuals and business may be liable, including income taxes, real and personal property taxes, sales tax, and trust fund taxes. Although many taxes are not able to be discharged in bankruptcy, including sales tax and trust fund taxes, some taxes are eligible to be discharged under specific circumstances allowing you some tax debt relief in Lebanon Missouri.

Generally, income taxes owed to the IRS or a state Department of Revenue may be discharged under the following circumstances.

The Tax Debt Must Be At Least Three Years Old

For example, if your 2015 tax returns were due on April 15, 2015 then your 2015 taxes were eligible to be discharged beginning April 15, 2018.  Your 2018 taxes would be due on April 15, 2019. In order for 2018 income taxes to be eligible to be discharged, you would have to wait until April 15, 2022, to file your bankruptcy case. Any extensions may also impact this time frame.

The Tax Returns Must Have Been Filed More Than Two Years Ago

If you owed taxes for 2015 but waited until 2018 to file your tax return, your 2015 income taxes would not be eligible to be discharged. This issue is further complicated by case law that states a late filed tax return may not be considered a tax return at all.

The Taxes Must Have Been Assessed Against You More Than 240 Days Ago

Typically, the IRS assesses taxes to you when you file your tax return. However, if your tax return is audited and the IRS imposes additional tax liability as a result of the audit, the assessment may not be completed until well after a tax return was filed.

Even if your tax liability meets these guidelines, there are still ways taxes can survive a bankruptcy case. The IRS and state taxing agencies have the authority to place liens against real estate and other personal property you own, and the liens can remain even after bankruptcy.

Personal property taxes may be eligible to be discharged in bankruptcy if they were “last payable without penalty” more than a year before the bankruptcy case was filed. In Missouri, property taxes are due on December 31 of the year they are assessed. For example, 2018 personal property taxes are due on December 31, 2018.

In order to be dischargeable in bankruptcy, the case must be filed more than a year after the due date of the taxes. Therefore, for 2018 personal property taxes to be dischargeable, a bankruptcy case would have to be filed on January 1, 2020, or later.

Determine if your tax debt can be eliminated with bankruptcy by speaking with our bankruptcy attorneys who understand the necessary requirements for this type of discharge.

If your tax debt does not meet the requirements for discharge, there are still benefits a bankruptcy may provide. For instance, repaying tax debts will often mean owing additional penalties, fees and interest to the taxing organization. In a Chapter 13 bankruptcy, tax debts are paid as a priority debt, therefore, getting paid through your plan without penalties and fees.

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