TAXES DISCHARGED IN BANKRUPTCY:
Some taxes are discharged in bankruptcy

Goldstein Bershad Fried & Lieberman is frequently involved in seeking relief for our clients from federal and state taxes.   While tax payment installments can be forced on taxing authorities through chapter 11 and 13, often the simplest and least expensive solution is discharging the personal income taxes in chapter 7. 

Individual Income Tax: Yes!  Personal income tax liability, both state and federal, can be discharged in a bankruptcy if they were last due, including extensions, more than three years before the bankruptcy is filed AND the tax return was filed more than two years before the bankruptcy is filed. 

Business Tax:  Maybe!  Individuals in control of a business can be personally liable for certain kinds of federal and state business related tax even if the business is a corporation or limited liability company.  Of course, there is personal liability for all debts, taxes and otherwise, for individuals doing business as a sole proprietorship or partnership.  Virtually all taxes except withholding tax can be discharged in a bankruptcy.  To be discharged, the same two year and three year rules described above will apply.

What if the taxes can't be discharged?  You can still get help in the Bankruptcy Court.  In a chapter 11 or chapter 13 bankruptcy, you can force the taxing authority to accept installment payments of tax.  Click for more info.