Taxes first due within three years of the bankruptcy and taxes assessed within 240 days of the bankruptcy, or which are un-assessed but assessable when the case is filed, are priority claims which are not subject to discharge.

 

 

Priority taxes will survive a Chapter 7 discharge to the extent that the trustee does not have money in the estate to pay them.

 

 

In Chapter 13, such taxes must be paid in full through the plan; penalties associated with those taxes, however, can be treated as a non-priority claim and paid a fraction along with other unsecured claims. In Chapter 13, the tax does not continue to incur interest during the case; if the plan is completed, no post filing interest is due.

 

 

Taxes for which no return has been filed are not dischargeable in bankruptcy.

 

 

If a return was filed late, for a year outside of the priority tax period, the return must have been on file for two years for the tax to be discharged in bankruptcy.