Bankruptcy and Tax in Chatham County, GA

Bankruptcy and Tax in Chatham County, GA

If you are an individual debtor in Chatham County, GA filing for bankruptcy under chapter 7 or 11 of the Federal Bankruptcy Code in , an independent ‘‘estate’’ is created comprising of property which belonged to you before the filing date. This bankruptcy estate is a new taxable entity, completely separate from you as an individual taxpayer.

A penalty for failure to pay tax, including failure to pay estimated tax, will not be imposed for any period during which a title 11 bankruptcy case is pending provided:
1. The tax was incurred before the earlier of the order for relief or (in an involuntary case) the appointment of a trustee, and
2. The bankruptcy petition was filed before the due date for the tax return (including extensions) or the date for imposing the penalty occurs on or after the day the bankruptcy case was filed.

This relief from the failure-to-pay penalty is not applicable to any penalty for failure to pay or deposit tax withheld or collected from others and required to be paid over to the United States government. Nor does it apply to any penalty for failure to timely file a return.

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