March 19, 2015

Discharging Taxes in Bankruptcy: Late Filed Tax Returns and Dischargeability

Discharging Taxes in Bankruptcy: Late Filed Tax Returns and Dischargeability

March 19, 2015

Pursuant to 11 U.S.C. § 523(a)(1)(B)(ii) income tax debts may be discharged in bankruptcy so long as the applicable return was filed more than two years prior to the petition date. This is known, in bankruptcy parlance, as the "Two Year Rule." In 2005, an amendment was made to the Bankruptcy Code that, based on several recent Circuit Court of Appeals rulings, has been interpreted to virtually eliminate the Two Year Rule. Other courts disagree with the recent rulings and the issue appears headed to the Supreme Court. Our expert panel will explain how the Two Year Rule works, the effect of the recent Circuit Court of Appeals decisions and how to properly counsel clients in light of the state of the law.

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