Can Taxes be Wiped Out in Bankruptcy?


Income Taxes


Most people believe that income taxes cannot be discharged (wiped out) in bankruptcy.  This is wrong.  If you meet all of the below criteria, your income tax debt may well be discharged in bankruptcy.


  1. The return was due, including any extensions granted, more than 3 years prior to your bankruptcy filing;
  2. The return was actually filed more than 2 years prior to your bankruptcy filing;
  3. The tax was assessed more than 240 days prior to your bankruptcy filing;
  4. The tax return must not have been fraudulent; and
  5. You must not be guilty of a willful attempt to defeat or evade the tax.


There are numerous subtleties in the application these rules.  And this area of the law is evolving.  So you should talk to a tax or bankruptcy attorney experienced in this area.


Property (Real Estate) Taxes


Property taxes can be discharged if your bankruptcy is filed more than one year after the last date to pay the tax without interest or penalties.  However, unpaid property taxes remain a lien on the real estate.

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For more information on bankruptcy check out the Milwaukee Bankruptcy Center or call (414)445-2590.










The Milwaukee Bankruptcy Center is a debt Relief Agency, helping people file for bankruptcy since 1997.