Back Local Taxes

[Uncle]

I received a notice from the city I live in regarding back taxes for 2007-2011. These are for local income taxes. I filed chapter 7 6/30/2011 and was subsequently discharged.

I did not include the city on my list of creditors. The city is now trying to collect back taxes, interest, and penalty. Does my bk filing play into this at all?

[Uncle]

bump

[frogger]

Look on the back of your discharge paper and pay attention to the section of "Debts that are not discharged":

Some of the common types of debts which are NOT discharged in a chapter 78 bankruptcy case are:

a. Debts for most taxes

[DebtEnder]

1. Your tax returns must have been due three years or more before the bankruptcy petition is filed;

2. Your tax returns have to have been filed more than two years before the petition;

3. The tax you owe must have been assessed against you by the government for at least 240 days before the case is filed;

4. Your tax returns must have been truthful and not fraudulent; and,
You must not have been intentionally attempting to evade or defeat the tax when you failed to pay.

Based on this the only year I think you could discharge, assuming you filed on time would be the 2007 tax. If that is a sizable amount for one year it might be worth trying to reopen the case and add them to your creditor list. However tax from the past 3 years before BK yours still on the hook for. And 2011 tax does not count as all as that came due after you filed.

[Ifonly]

Ah, yes, the every popular PA local income tax. I would hazard a guess that you didn't file, yes? If you were a W2 employee in PA, chances are a large portion of this tax was already taken from your paycheck (that would be the best case scenario). If that's the case and you haven't filed, figure out what you really owe - it may not be much. And most of the local jurisdictions will take just the tax and waive the interest and penalties.

And as far as a CH7, I believe frogger is correct - they are not discharged. In a CH13, they would be treated as priority debt. In fact, we included our Berkheimer (local income tax - PA) in our CH13 and I had to pay my attorney to file their claim as they did not file even after being named as a debtor. If I hadn't have done that, the tax debt would survive my eventual CH13 discharge.