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Can Taxes Be Discharged During Bankruptcy?

Can Taxes Be Discharged During Bankruptcy?
"""State or federal income taxes may be discharged in a bankruptcy proceeding if: 1) the taxes for such tax year are at least three years old; 2) a tax return was filed for such tax year at least two years prior to the bankruptcy filing date; 3) the tax return was not intentionally false or fraudulent; and 4) the tax was not assessed by the taxing authority within the past 240 days.Nonetheless, if a tax lien has been recorded prior to the bankruptcy filing, the taxing authority will be a """"secured creditor"""" in the bankruptcy proceeding, and its lien on any real and/or personal property will survive the bankruptcy to the extent that the property has sufficient """"equity"""" to support the lien. Any portion of the tax levy that is """"unsecured"""" will be released (forgiven).For instance, if your property is worth $200,000, you have first and second mortgages totaling $180,000 and a tax lien of $40,000, your equity is only $20,000. Therefore, $20,000 of the tax lien would survive the bankruptcy, while the remaining $40,000 would be discharged (forgiven) due to the absence of sufficient equity.Taxing authorities may hold business proprietors and other """"responsible persons"""" personally liable for payroll taxes withheld from an employee's wages but not remitted to the proper taxing authority. These taxes, also known as """"trust fund"""" taxes, are not dischargeable in bankruptcy.The employer's share of employment taxes not withheld from an employee's wages may be discharged in a bankruptcy proceeding under the same conditions as for state and federal income taxes.""

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"Can Taxes Be Discharged During Bankruptcy?" was written by Mary under the Finance / Wealth category. It has been read 175 times and generated 1 comments. The article was created on and updated on 02 June 2023.
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