Indiana Bankruptcy Attorney Advises Clients About Non-Dischargeable Tax Debt

Indiana Bankruptcy Law Firm Focuses Serving Those With Tax Debt

When you file for chapter 7 bankruptcy in Indiana, you will be able to discharge much of your debt, but you cannot erase most non-income related debts, such as:

• Tax liens – A chapter 7 bankruptcy discharge of income tax wipes out the personal obligation to pay the tax and prevents the taxing authority from pursuing your bank account or wages, but tax liens, also known as secured taxes, will remain attached to your property if they were recorded against the property before you filed for bankruptcy. This means that although you may not be personally liable for the tax debt, you'll be responsible for paying the lien from any profits resulting from the sale of the property.
• Recent property taxes – If a property tax was incurred before you filed for chapter 7 bankruptcy, the tax is non-dischargeable. However, this rule only applies to property taxes last payable within one year of your bankruptcy filing. You can discharge your personal liability for property taxes that were payable more than one year before your bankruptcy filing without penalty.
• Taxes a third party is required to collect or hold – This applies to trust-fund taxes such as FICA, Medicare, and income taxes that an employer must withhold from an employee's pay, and sales taxes paid by the debtor's customers that the debtor is required to submit to the government.
• Certain employment taxes – Including excise taxes and custom duties, depending on the time period.
• Non-punitive tax penalties – If the transaction or event that the penalty arose from occurred less than three years before the bankruptcy petition was filed.
• Erroneous tax refunds or credits relating to non-dischargeable taxes.

To learn about your options regarding dealing with tax debt, contact the law firm of Saeed & Little LLP online or call 317-800-6181 to receive a free case evaluation from an experienced Indiana bankruptcy attorney.