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West Palm Beach Bankruptcy & Business Attorneys > > Bankruptcy Attorneys > Are All Taxes Forgiven During Bankruptcy in Florida?

Are All Taxes Forgiven During Bankruptcy in Florida?


Bankruptcy is designed to help people who find themselves under a vast amount of debt a way to get back on their feet and start over financially. This happens by discharging the debts they owe so that they no longer have a legal obligation to pay them. During this process, though, there are some debts that are harder to have discharged than others, such as tax debt.

For a person to have their tax debts discharged or relieved, they must meet certain requirements. In the most basic sense, filing to have tax debts discharged can all come down to timing.

What tax debts can be discharged? 

There are a few simple rules that will tell a person if their tax debts are able to be discharged or not.

  • The taxes must have been due at least three years prior to filing.
  • The tax return, if filed, was filed at least two years prior to the bankruptcy claim.
  • The IRS assessed the person’s debts more than 240 days prior to the bankruptcy claim being filed.

Different filings have different rules

The chapter a person chooses to file under also affects what tax debts may be discharged. For example, under Chapter 7, income taxes are the only type of tax debt that can be discharged.

Federal taxes may be discharged if they meet the following criteria:

  • They are income taxes;
  • You did not file a fraudulent tax return or willfully evade taxes;
  • You filed a tax return for the debt at least two years before you filed for bankruptcy;
  • The tax debt was due at least three years before your bankruptcy filing; and
  • The IRS assessed your income tax at least 240 days before you filed a bankruptcy petition.

If you qualify for a discharge, but the IRS has already filed a lien against your property, the situation isn’t so straightforward. Under Chapter 7, liens cannot be forgiven and will have to be settled outside of the bankruptcy filing. After the filing, the IRS cannot come after the money you owe through your bank accounts or wage garnishment, but you will instead be responsible for paying back what you owe through the sale of your assets during the bankruptcy process.

Under Chapter 13, a person will still have to pay back the taxes they owe, but the amount could change based on certain criteria and financial situations. This includes if the tax debts were filed as either a priority claim or a non-priority unsecured claim.

Non-dischargeable tax debts include property taxes, trust fund taxes, sales taxes, certain employment taxes, and non-punitive tax penalties that occurred less than three years prior to filing for bankruptcy.

Filing for bankruptcy and discharging tax debts in Florida

If you decide to pursue bankruptcy in order to discharge your owed taxes and other debts, you still have quite a few options to consider. To help you decide the best way to file for bankruptcy to discharge your tax debts, consult with a knowledgeable West Palm Beach bankruptcy attorney. The team at Kelley Kaplan & Eller can help you navigate the bankruptcy process from start to finish.


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