Can I Use Bankruptcy to Discharge Tax Debts?

File bankruptcy to settle your tax debts

While some tax debts can be discharged through bankruptcy liquidation, there are exceptions. Section 523 of the Bankruptcy Code identifies three debts you must repay: 1. Unfiled tax returns. If you did not file a tax return for the year the debt is assessed, you cannot obtain a discharge. If you filed late tax returns, you must wait two years before you can seek a discharge. 2. Priority tax claims. If the tax debt is a Section 507 priority claim, it cannot be discharged in bankruptcy. Priority claims must be paid in full. They include: A tax required to be …

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