Episode 23: Discharging Taxes in Bankruptcy

One reason people here in New Jersey are contemplating bankruptcy, in addition to credit card and medical debt, is a big tax bill that they cannot pay. People often ask me whether taxes are dischargeable (and many people think that they are not). The answer I usually give is, it depends. Whether taxes get discharged depends on two things: What kind of tax it is (income, real estate, sales, or tax withholdings from employees), and whether it passes the bankruptcy code’s three part discharge test. To get a good answer to this question I asked local tax accountant Ira Krassan to join me to go over these points and give you a good idea of whether bankruptcy can get rid of part, or all, of your tax debt and get you the fresh start that you need.