Chapter 11 Bankruptcy. The filing of a personal bankruptcy petition creates what is known as the bankruptcy estate. This is a separate taxable entity for IRS purposes. As a result, a person’s tax obligations do not end with the filing of a bankruptcy petition. Rather, those obligations vary depending upon the type of bankruptcy filing,
irs bankruptcy
Discharging state income taxes in bankruptcy
State Income Taxes in Bankruptcy State income tax can be burdensome and may contribute to a debtor’s decision to file for bankruptcy. Fortunately, state income tax is dischargeable in bankruptcy under certain circumstances. Those circumstances are largely identical to the circumstances under which federal income taxes can be discharged, as the power of the bankruptcy
Requirements for Discharging Taxes in Bankruptcy
A debtor will typically file for bankruptcy in order to seek the protection of the bankruptcy laws against debts that cannot be paid in full, and it is not uncommon that such debts will include federal tax debts owed to the Internal Revenue Service (IRS). Typically, federal tax debt is not dischargeable in bankruptcy. That