Tax Relief and Chapter 7 Bankruptcy

Chapter 7 bankruptcy provides a powerful mechanism for discharging older personal income taxes to federal and state tax authorities. A properly timed and granted Chapter 7 can completely extinguish or eliminate older federal and state income taxes in full. A properly granted Chapter 7 can also discharge and provide full relief from town personal property taxes.


To obtain all of the tax relief possible under Chapter 7, you need the knowledge generated from 30 years of Chapter 7 relief for Connecticut residents at the Law Offices of Neil Crane, LLC. Contact our lawyers online, call us at 203-230-2233 or call us toll free at 888-249-3027 for a free initial consultation.

Chapter 7 Protects You From Collections, Liens, Levies or Seizures

The proper filing of a Chapter 7 bankruptcy petition will stop all tax collection actions for any type of tax immediately upon filing through the creation of an automatic stay. This provides for full protection from any collection action, liens, levies or seizures while allowing the taxpayer to reorganize or discharge various types of taxes in accordance with the law and a legal determination carefully made by our experienced bankruptcy counsel.

Our analysis of your overall financial problem, along with a careful legal review of your tax circumstances and tax transcripts, allows us to provide complete relief from taxes wherever legally possible. At the Law Offices of Neil Crane, LLC, this tax bankruptcy knowledge is combined with our 30-year reputation for superior legal representation in all aspects of Chapter 7 bankruptcy.

"Your persistence, confidence and competencies guided me through what would normally be an unbelievably painful experience. However, with your assistance and sound advice, the entire event was not nearly as difficult as I expected. Again, I cannot thank you and your staff enough." - Testimonial from a client

Experience and knowledge is the key to our ability to provide maximum discharge of federal, state and local taxes through Chapter 7 bankruptcy.

Chapter 7 provides extensive tax relief, including:

  • Personal property taxes on automobiles, boats, personal belongings and business equipment can be relieved in full if they are over a year old on the date of the Chapter 7 filing.
  • State and federal income taxes can be extinguished under certain circumstances if they are over three years old.
  • Real estate taxes can be automatically stayed from collection or property sales by the filing of a Chapter 7, but they are collectable after the case unless other arrangements are made.

Determining Whether Your Debts Can Be Discharged

Chapter 7 tax dischargeability is available to all individuals, businesses or other entities who properly qualify for a Chapter 7 discharge. While the bankruptcy rules for Chapter 7 dischargeability are clear and concise, the proper analysis and determination of Chapter 7 tax dischargeability requires an understanding of all the nuances of rules and timing requirements that can seriously impact the final extinguishment of taxes deemed dischargeable under Chapter 7. An improperly filed Chapter 7 by inexperienced counsel is not removable from the Bankruptcy Court and could result in the loss of some or all of the advantages of a properly prepared and timely filed Chapter 7 bankruptcy as prepared by our experienced bankruptcy tax relief attorneys at the Law Offices of Neil Crane, LLC.

All tax analyses begin with the prompt evaluation of the best records available in the Internal Revenue Service's (IRS) own files. These records are often referred to as a tax transcript. No determination or tax analysis should ever be made based upon a taxpayer's records, as these can often be incorrect or incomplete. In any event, anything short of the IRS or DRS full records of the taxpayer's history will never provide the proper information to be relied upon by an experienced bankruptcy tax attorney.

The proper primary source material to be relied upon in a Chapter 7 bankruptcy tax analysis is called an "account tax transcript." The tax transcript is essentially the IRS's own summary of activity for the personal or business taxpayer involved. From this account, we examine the IRS's records under the initial three basic rules for determining Chapter 7 income tax dischargeability.

The basic Chapter 7 tax discharge rules are as follows:

  1. The tax is for a tax year that has been due for more than three years, including extensions.
  2. The tax return has been filed for over two years prior to the date of the bankruptcy filing.
  3. No tax assessment has been made within the 270 days prior to the bankruptcy filing.

While these are the basic rules under Chapter 7, there are numerous additional requirements and pitfalls that require the taxpayer to obtain the best and most experienced bankruptcy legal counsel available.

The basic time frames for tax dischargeability can be tolled or extended for various reasons, including:

  • The extension of an offer in compromise application
  • The filing of a prior bankruptcy proceeding under Chapter 7, 11 or 13
  • The filing of a substitute or subsequent filed return

These events require than an experienced tax relief and bankruptcy attorney recalculate the applicable timeframe in order to assure maximum Chapter 7 tax dischargeability.

Are You Eligible for Chapter 7?

In order to obtain any type of tax discharge under Chapter 7, the individual must properly qualify for eligibility under the stringent income rules for Chapter 7 under the new Bankruptcy Code BAPCPA. These extensive bankruptcy revisions have severely restricted overall Chapter 7 relief by imposing income restrictions to qualification for a discharge of unsecured debt, (including dischargeable tax debt) relief rather than Chapter 13 repayment.

Over median income individuals are required to prove eligibility under the means testing procedures detailed by family size and geographical area based upon the petitioner's trailing six months of income prior to filing.

A case that doesn't qualify for Chapter 7 relief or is improperly timed can have drastic negative ramifications for the taxpayer petitioner — and remember: Chapter 7 cases cannot be removed without full court approval, and that approval is rarely granted. An improper filing can be disastrous and permanent. Therefore, you need the most qualified counsel available to assure that you are certain to use every method legally available to qualify for Chapter 7 relief under the new bankruptcy restrictions and the attendant full tax elimination available under the law.

Experienced at Handling Chapter 7 Discharges and Tax Relief

The attorneys at the Law Offices of Neil Crane, LLC, have carefully studied and practiced all the methods available to qualify for the maximum debt relief and Chapter 7 tax dischargeability available.

Chapter 7 is a powerful tool for tax debt relief but it needs to be perfectly done, perfectly timed, and can only be done once in the hands of the best Chapter 7 bankruptcy professionals available at the Law Offices of Neil Crane, LLC. We've properly completed and discharged over 3,000 people successfully since the new law was enforced on October 15, 2005.

To discuss Chapter 7 bankruptcy tax relief, contact us online or call us at 203-230-2233 or toll free at 888-249-3027. We offer free initial consultations. We have office locations in Hamden, Bridgeport, Ridgefield, Waterbury and Rocky Hill.

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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.