Having an in-depth knowledge of Chapter 7 bankruptcy laws in New York State, I can attest to its intricate and multifaceted nature. For those who are unfamiliar with the legal system or have never had to deal with financial hardship, it’s overwhelming to navigate the ins and outs of filing for Chapter 7 bankruptcy. In this blog post, we will delve into what exactly Chapter 7 bankruptcy entails, how it differs from other forms of bankruptcy, and what steps you need to take if you are considering filing for it. By the end of this article, you will have a comprehensive understanding of everything you need to know about Chapter 7 bankruptcy in New York State.

Understanding NYS Tax Dischargeability in Bankruptcy

Regarding bankruptcy filings in NYS, we must observe certain regulations for discharging tax obligations. Any income tax debt incurred within three years of the filing date is not dischargeable. This includes both state and federal taxes. In addition, if you owe back taxes from over three years prior to your filing date, they may still be eligible for discharge if they meet all other requirements.

To qualify for a full discharge of tax debt, taxpayers must have filed all relevant returns within the two years prior to filing bankruptcy, including federal and state forms. Any Amendments, offer in compromise or bankruptcy filing can toll these periods . Finally, taxpayers cannot discharge any unpaid payroll or sales taxes in either type of bankruptcy proceeding.

To qualify for a tax debt discharge under Chapter 7 bankruptcy proceedings in New York State, individuals must show that it has been at least three years since the original due date of each return associated with the debt; this excludes any late-filed returns. They must provide proof that paying off these debts would cause them extreme difficulty or financial distress, such as job loss or incapacitating illness/injury which prevents them from generating enough income to pay off said debts without further harm.

Individuals can better inform themselves when making decisions regarding their financial future by understanding the basics of NYS Tax Dischargeability in bankruptcy. In order to qualify for a NYS Tax Discharge in Bankruptcy, one must be cognizant of the prerequisites that have to be fulfilled.


Key Takeaway: When discharging taxes owed to New York State in a Chapter 7 or 13 bankruptcy filing, individuals must meet certain criteria for full discharge of their tax debts. If the tax debt is incurred within three years before the filing date, then this may not be eligible for discharge.

Eligibility Requirements for NYS Tax Discharge

In order to qualify for tax discharge in NY, you must meet certain requirements. Foremost, you must file a Chapter 7 or 13 bankruptcy petition. In addition, the taxes owed must have been due over three years prior to filing your petition. The assessment or payment of the taxes must not involve any fraud and you must not have had the taxes assessed within 240 days of filing your petition.

It is important to note that income tax liabilities are only dischargeable if they relate to a return, which was due over two years before filing for bankruptcy relief.

When determining eligibility for NYS Tax Discharge, it is important to consider whether an offer-in-compromise has been accepted by the IRS and what type of repayment plan was established. This could impact eligibility requirements significantly depending on when such an agreement was reached and what type of repayment plan was agreed upon between both parties. Therefore, it is best practice to consult with professional legal counsel when assessing one’s eligibility status under these rules and regulations in order to ensure compliance with applicable laws while attempting debt relief through bankruptcy proceedings.

In order to be eligible for NYS tax discharge, one must meet certain requirements. Moving on, we will discuss how to file for a NYS tax discharge.


Key Takeaway: In order to be eligible for a tax discharge in New York State, you must meet certain criteria such as filing either a Chapter 7 or 13 bankruptcy petition and having taxes owed due over three years prior. If someone fraudulently filed taxes, they will not be dischargeable in bankruptcy; To ensure compliance, it is wise to seek professional legal counsel before proceeding.

How to File for NYS Tax Discharge

Filing for NYS tax discharge can be a complicated process, but with the right information and guidance, you can successfully file your petition. The first step is to determine if you are eligible to file for NYS tax discharge. To be eligible for NYS tax discharge, you must have filed the taxes at least 2 years ago, not made an offer in compromise, and the taxes must have been assessed within 240 days of your bankruptcy filing. If you fulfill NYS’s criteria, then you can submit your request.

Filing for NYS Tax Discharge is a complicated process that requires thorough research and understanding of the law. Thus, prior to making a choice on filing for NYS Tax Discharge, it is essential to be conscious of the repercussions. Next, we’ll discuss some potential consequences associated with filing for NYS Tax Discharge.

Potential Consequences of Filing for NYS Tax Discharge

When contemplating bankruptcy in New York State, one should be cognizant of the potential repercussions. Sometimes, even if the debt is eliminated through bankruptcy proceedings, certain taxes or fees associated with it may still need to be paid. For instance, if a creditor files an objection to your discharge during the bankruptcy process, then they can challenge whether their claim should be discharged. This could cause them being able to collect from you after all other creditors are paid off through the bankruptcy process.

Falsifying statements on one’s petition for tax discharge in NYS can come with serious repercussions; state and federal authorities may start criminal proceedings, while creditors who were denied payment because of these misrepresentations could bring civil liability suits. Failing to disclose assets or income during the filing process could cause the denial of relief from taxation debts altogether, leaving the debtor liable for repaying all outstanding taxes plus any accrued penalties and interest until that point.


Key Takeaway: Filing for tax discharge in New York State has potential consequences, such as having to pay penalties or interest on back taxes even if the debt is discharged. Falsifying statements during the process could lead to criminal proceedings and civil liability suits. FAQs in Relation to Bankruptcy and Nys Tax

Does bankruptcy clear NYS tax debt?

Yes, bankruptcy can clear NYS tax debt. Chapter 7 and 13 bankruptcies are available to individuals who owe taxes to the state of New York. Under these types of bankruptcy, you may discharge your tax debts or reorganize them into a manageable payment plan. It is imperative to consider the fact that certain conditions must be satisfied in order for this form of debt alleviation to succeed; thus, it is recommended that you get legal counsel from a proficient consumer bankruptcy lawyer prior to making any choices regarding your fiscal state.

Chapter 7 vs Chapter 13 discharge?

Bankruptcy can influence taxes. Filing for Chapter 7 bankruptcy will discharge most of your debts, including most income tax debt that is over three years old. Though Chapter 7 bankruptcy may erase certain taxes, such as income tax debt over three years old, other forms of taxation (e.g., payroll or sales) and some non-dischargeable income tax liabilities like recent returns due or fraudulently filed one’s may still need to be paid. In contrast to Chapter 7, filing for a Chapter 13 bankruptcy can eliminate all tax debt, even debt that is non-dischargeable in a chapter 7.  The non-dischargeable portions can be repaid over 3 to 5 years in a chapter 13 case. For an in-depth understanding of how bankruptcy may affect your individual circumstances, it is recommended to seek the advice of a specialized consumer bankruptcy lawyer.

Does NYS forgive tax debt after 10 years?

No, New York State does not forgive tax debt after 10 years. In New York, the collection period for taxes is usually three years from when the return was due or two years from payment, whichever comes later; beyond that point, taxpayers remain liable for any unpaid taxes and interest. After that period has passed, taxpayers are still liable for any unpaid taxes and interest associated with them. Bankruptcy may be an option to address this issue depending on individual circumstances.

Can bankruptcy take your income tax?

No, bankruptcy does not take your income tax. Chapter 7 and 13 consumer bankruptcies help individuals who have accumulated unmanageable debt by allowing them to discharge some or all of their debts for liquidating certain assets. Income taxes are typically considered a priority debt and cannot be discharged through either type of bankruptcy filing. It may be workable to haggle with the IRS or state revenue office to lessen or postpone payment of outstanding taxes owed, depending on a person’s financial circumstances.


It is essential to be aware of the qualifications and filing procedures, as this can prevent incurring any extra charges or penalties because of incorrect submission. Ultimately, if done correctly, filing for NYS tax discharge through bankruptcy can be an effective way of eliminating debt while protecting your assets from creditors.