Are Taxes Bankruptable by High Income Taxpayers?
Taxes debts are unequivocally dischargeable by taxpayers regardless of income. The degree of ignorance by even some of the most experienced bankruptcy attorneys is absolutely appalling.
Some of the bankruptcy trustees don’t like to see a high income taxpayer discharge tax debts and will protest a chapter seven discharge and attempt to force a conversion into a chapter 11 or 13. Bankruptcy attorneys are not well paid in the legal profession and don’t want the trouble of contesting the trustee. They don’t want to fight. Don’t hire such an attorney!
Congress mandated when it passed BAPCPA that consumer debts were subject to a means test under 707(b)2 of the United States Bankruptcy Cdoe. If a debtor’s income exceeds the mean in the state, the debtor could not obtain a discharge under a chapter seven. He or she must enter a repayment plan under a chapter 13.
However long-established case law, Wilbur G. Westberry, 2115 F. 3d 589, clearly established that tax debt is not consumer debt. As tax debt is not consumer debt, it is not subject to the means test. There are some timing rules and there can be no fraud. So long as a taxpayers income tax debt exceeds his or her consumer debt, he or she may file a chapter seven and get a discharge on the tax debt! This the law!!