Robert I Cohen, P.C. Advises Consumers that they Can Discharge Taxes in Bankruptcy

DENVER - May 9, 2013 - PRLog -- Robert I Cohen, P.C., www.denverbankruptcylaw.com is advising consumers who may have felt the pinch of tax season that they can discharge old taxes in bankruptcy filings.  Many consumers are unaware that these old taxes can be discharged in this way.  In fact, conventional wisdom has largely led consumers to believe that tax (like child support payments) is never dischargeable.  To aid consumers who may be feeling the pinch after this recent tax season, the bankruptcy attorneys at Robert I Cohen, P.C. are advising consumers on their options when it comes to discharging old taxes in a bankruptcy filing.

Robert I Cohen, P.C., a Denver legal firm, explains that while the following rules may apply in many cases, they will not apply in all cases.  Therefore, it is important to seek legal counsel regarding consumers' individual matters to better understand rights and responsibilities under the law.

In order to discharge taxes under a Chapter 7 or Chapter 13 bankruptcy filing, the following criteria must be met:

•   The original due date for the return was at least three years prior.   This means that as of April 15, 2013, taxes for 2009 (if filed before April 15, 2010) are now dischargeable.
•   The tax return for earlier years may have been filed late, but must have been filed at least two years ago.
•   Any new tax assessments received from the taxation authority for 2009 or earlier must have been assessed at least 240 days ago, or approximately six months, old.  Many assessments are not discovered or received for a year or even two years after the default on payment.
•   The relevant tax return was not filed fraudulently and the tax payer is not guilty of tax evasion beyond being unable to pay the amount in question.

If a debtor meets all of the above criteria, taxes may be discharged through the bankruptcy process.  For a Chapter 7 debtor, this means a complete discharge in a liquidation bankruptcy.  For a Chapter 13 debtor, this means incorporating the taxes into the Chapter 13 plan to be treated as unsecured debt.  If other unsecured debtors are being paid a percentage of their debts, a certain percentage of the taxes may have to be repaid as well, although the percentage is generally very low.

There may be different rules for certain types of business taxes and Chapter 11 filings, so consulting a bankruptcy attorney is critical in understanding how each type of filing affects an individual or small business and which is the most appropriate for particular needs.

About Robert I Cohen, P.C.:   Robert I. Cohen, P.C. can assist debtors in determining if bankruptcy is the right choice to discharge their debts and in choosing the right type of bankruptcy filing for their needs.  They have been doing so for over 30 years.

For more information: www.denverbankruptcylaw.com