Discharging Income Taxes in Bankruptcy: One of Four
By Nicholas Ortiz, Boston Bankruptcy Attorney on Dec 3, 2008 in Tax Issues In Bankruptcy
There are four general requirements for discharging an income tax in bankruptcy. In this post, I will discuss the first: The tax must be one for which the return was not last due within three years of the filing of the bankruptcy. Therefore, if a 2005 income tax return was last due on April 15, 2006, the three-year requirement would be met after April 15, 2009.
A complication concerns the “last due” requirement. What happens when the debtor requests and receives an extension? The answer is that the three-year clock starts after the last extension. See In re Wood, 866 F.2d 1367 (11th Cir. 1989).
The three-year period is also tolled during the time when the taxing authority is barred from collecting the debt because of a prior bankruptcy.
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