As a general rule, tax debts are not dischargeable in bankruptcy. However, there are limited circumstances when a debtor may bankrupt their tax debt. The following must occur:
- The tax is income based;
- The taxes are more than three (3) years old since the due date;
- The tax returns were filed timely;
- There was no fraud and/or attempt to evade the tax; and
- The taxes were not assessed within the last 240 days.
If all the above conditions are met, you may be able to discharge your tax debt in a Chapter 7 Bankruptcy.
There are some tax debts that cannot be discharged in bankruptcy and they are generally non-income related tax debts.
- Tax Liens: If the taxing authority has filed a lien which has attached to your property prior to the filing of your bankruptcy, then the filing of a Chapter 7 Bankruptcy will not extinguish the lien even if the tax debt is discharged in the bankruptcy.
- Employment Tax:
- Property Tax: Generally you can discharge property taxes that were assessed at least one (1) year prior to the filing of the Chapter 7 Bankruptcy. However, similar to Tax Liens, although your personal liability may have been discharged the real property in which it was assessed against remains liable.
- Sales Tax and/or Third Party Tax: Sales tax and income tax withholdings for employees like FICA, Medicare, and Social Security that the debtor is required to hold in trust until it is due are generally non-dischargeable in a Chapter 7 Bankruptcy.
- Improper and/or Erroneous Tax Refunds: Tax refunds that are issued to the debtor in error are non-dischargeable in bankruptcy.
There are many exceptions, nuances, and events which can modify and or change the above rules. , so you should not conclude without having transcripts analyzed by an attorney expert with tax discharge issues that your taxes will or will not be discharged in a case you file.
The laws surrounding income tax and Utah Chapter 7 Bankruptcy are complicated and fact specific. Please call me at (801) 432-8682 to discuss your options and whether a Chapter 7 Bankruptcy will discharge your tax debt.
8833 S. Redwood Road, Suite C
West Jordan, Utah 84088
Telephone: (801) 432-8682
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Reviews for Ascent Law LLC Salt Lake City, Utah
We've gotten divorce and child custody work from Ascent Law since the beginning because of my ex. We love this divorce firm! Staff is gentle, friendly and skilled. Tanya knows her stuff. Nicole is good and Ryan is fun. Really, all the staff here are careful, kind and flexible. They always answer all my questions, explain what they're doing and provide great legal services. I personally think they are the best for divorce in Utah.
I have had an excellent experience with Ascent Law, Michael Reed is an absolutely incredible attorney. He is 100% honest and straight forward through the entire legal process of things, he also has a wonderful approach to helping better understand certain agreements, rights, and legal standing of matters, to where it was easy to know whats going on the entire process. I appreciate the competency, genuine effort put forth, and assistance I received from Ascent and attorney Michael Reed, and I will be calling these guys if ever I have the need again for their legal assistance! 5star review Wonderful attorneys!
This review is well deserved for Ryan and Josh. New clients should know they are worth the 5 star rating we give them. We needed 2 sessions from them because of the complexity of the matter, but they are both very passionate about his helping others in need. My sister needed bankruptcy and I needed divorce. Sometimes they go hand in hand but a large shout out to this team - also Nicole is one of the sweetest people you ever did meet - she offered me warm cookies!
Mike Anderson and his colleagues & staff are knowledgeable, attentive and caring. In a difficult and complex case that eventually went to trial, Mike was the voice of reason and the confidence I needed. His courtroom abilities are amazing and I felt his defense of me was incredible. His quick thinking and expertise allowed for a positive result when I felt the World was crumbling. His compassion, after the case, has helped me return to a good life. I trust Mike and his staff. They are friendly and very good at what they do.
I worked with Attorney Alex and Paralegal Ami in my divorce case. I got to know the team very well over the course of two years. I cannot think of a better team to have worked with. Ami and Alex are not only exceptional law professions who are very knowledgeable and thorough, they are also the best human beings who empathize with the emotions I was experiencing. Alex was conscious of my budget and worked efficiently to try to reduce unnecessary legal expenses. My case also involved some dealings with a foreign country that Alex and his team had previously dealt with. They did an amazing job addressing cultural barriers in a very respectful manner and did not fall short in quality of work or in standards when dealing with some of these new challenges. Ami deserves a medal for being extremely professional, calming, and compassionate when it is needed most. When you need family law attorneys, call this firm. I now feel I can move forward with grace and dignity.