The Rules for Discharging Taxes In a Bankruptcy Case


The Rules for Discharging Taxes In a Bankruptcy Case

Many individuals considering bankruptcy erroneously believe that they may not discharge taxes in bankruptcy cases. It’s important that all prospective Georgia bankruptcy debtors know that taxes are, in fact, dischargeable in a bankruptcy case, provided that certain requirements are met. Determining whether a debtor’s back taxes meet these tests for dischargeability often necessitates the advice of a tax or bankruptcy professional. If a bankruptcy debtor satisfies all federal law requirements, he or she may discharge federal, state, and local income taxes, as well as their corresponding interest and penalties, in Chapter 7, 11, 12 ,and 13 bankruptcy cases.

Whether a tax debt is eligible for discharge is often minimally a somewhat complicated analysis that involves the type of tax, the length of time the tax has been unpaid, whether a return has been filed, and the chapter under which the bankruptcy case is filed.

Three general rules are used to determine whether tax debt may be discharged in bankruptcy cases. Note that these rules apply only to federal, state, and local income taxes, but not to other types of taxes such as property taxes.

The 3-Year Rule:

Taxes must have become due at least three years before the filing of the bankruptcy case. Add three years to the due date to determine the earliest date a bankruptcy case may be filed to discharge  past due income tax debt.

The 2-year rule:

Income tax returns must have been filed at least two years before filing a bankruptcy case.

The 240-day rule:

Taxes must be assessed at least 240 days before the filing of the bankruptcy case or not assessed at all. This date is typically on or near the date that a tax form is filed, unless an audit occurred.

Exceptions apply to all of these rules. Determining whether taxes are dischargeable in a bankruptcy case is often a complicated analysis and typically necessitates the assistance of an experienced Georgia bankruptcy attorney. H. Lehman Franklin has helped those seriously affected by financial hardship in the Statesboro community for over 50 years. Along with a capable and dedicated support staff, attorneys H. Lehman Franklin and Kimberly Ward offer quality and zealous representation on behalf of their bankruptcy clients. Don’t hire just any bankruptcy lawyer to file your case. You need a lawyer like Lehman Franklin or Kim Ward who have 65 years of collective experience filing bankruptcy cases. If you’re in need of our services and would like a FREE consultation, give us a call, send us an email or simply check us out online.

Lehman Franklin, P.C. is located at 127 North Main Street in Statesboro, GA (30458). We proudly serve Bulloch County, as well as the surrounding counties of Chatham, Candler, Evans, Bryan, Effingham, Screven, and Jenkins. Contact our office by telephone at 912-764-9616, by email at, or check us out online at We’re available to meet your legal needs Monday through Friday from 8:30 AM until 5:30 PM.