If I’m considering filing Chapter 7 to eliminate some income tax debt, can my debt be discharged?

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If I’m considering filing Chapter 7 to eliminate some income tax debt, can my debt be discharged?

I pass the means test and all criteria except for possibly the willful evasion clause. I didn’t file or pay taxes for a small business for 6 years. I was young and dumb and had bad luck in the winters so by the time tax season rolled around I had spent all my savings and couldn’t pay taxes. During this time in my life I was labeled an alcoholic by the state and had other addictions. I didn’t file because I thought it would buy me some time to hopefully get some money together. I finally filed everything in 2009 so I’m current on all filing all returns and in a hardship status for 2000-06

Asked on January 1, 2012 under Bankruptcy Law, California


Mark J. Markus / Mark J. Markus, Law Offices of

Answered 12 years ago | Contributor

Failure to file returns is not a willful evasion of paying the tax.  Besides, you DID eventually file the returns, and it has been more than 2 years since you did, so it is possible they could be discharged at this time.  The bigger issue you face is if the IRS or FTB filed a "substitute return" during that period, because if they did, it most likely will not be dischargeable.

Tax dischargeability analysis is very complex and requires a thorough review of the literal tax transcripts from the taxing agencies.  I have expertise in that area. 


Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.


bankruptcy blog: http://bklaw.com/bankruptcy-blog/

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