Can your taxes be taken for an unpaid bankruptcy?

Generally, returns of income taxes can be offset for amounts owed to federal or state agencies whether or not a bankruptcy has been filed or discharged. If the bankruptcy has not been discharged the returned funds belong to the bankruptcy estate and the trustee will determine the disposition of those funds. If the bankruptcy has been discharged resulting in a deficiency balance owed to a state or federal agency, income tax returns may be subject to offset to be applied to amounts owed.

The best advice is to contact a good, local bankruptcy attorney for counsel regarding what effects a bankruptcy might have on current or future assets.

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