What Types of Tax Debts Can Bankruptcy Address?

There are multiple taxes that people living in Georgia must pay. There are state and federal income taxes, sales taxes, taxes on specialty goods and property taxes. Both income taxes and property taxes can result in significant debt that individual filers may struggle to manage.

As a general rule, most tax obligations are not eligible for a discharge during bankruptcy proceedings. Even if the debt puts a homeowner’s primary residence at risk, they generally cannot discharge their property tax debts during bankruptcy. However, there may be limited protection available for those with significant, older income tax debts.

There are several requirements for those seeking to discharge federal income tax debts in a Georgia bankruptcy filing. Typically, they must have filed their tax returns and must not face any allegations of intentional fraud or tax evasion. Additionally, they can only discharge income tax debts that are at least three years old. Relatively recent income tax debts are not eligible for discharge.

Slightly different standards are in place for those seeking relief from Georgia state income tax debts. There is a rule that requires that the state income tax debt itself be at least three years old. Additionally, the filer must have filed their returns and must have done so at least two years before initiating their bankruptcy case. The state does not allow for the discharge of tax debts in cases where people failed to file their returns or when they face accusations of submitting fraudulent returns.

People struggling with significant income tax debt at the federal or state level are sometimes eligible for relief during bankruptcy proceedings. One way to do this is to include tax obligations within Chapter 13 repayment plan During both Chapter 7 and Chapter 13 proceedings, the automatic stay offers the chance to address looming debt issues without immediate fear of collection actions.

People attempting to address tax debts and other, more complex financial obligations should consult with a qualified lawyer to understand their options. Jeff Field & Associates has decades of experience successfully representing Georgia residents from offices in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur. Please call 404-381-1278 or contact us online to schedule a consultation.