By Ryan C. Wood

In my previous blog articles I have explained that taxes are dischargeable in bankruptcy if they meet the following requirements: 1) the taxes were due more than 3 years ago, 2) filed more than 2 years ago, 3) assessed more than 240 days ago, 4) filed in good faith, and 5) is not filed fraudulently. What happens if you have to file an amended tax return?

Taxes will become a more common reason for people to file for bankruptcy protection. Bankruptcy lawyers everywhere are seeing more and more people with significant tax debts. Our taxes are not going to decrease anytime soon either.

Everyone makes mistakes sometimes. That is human. Everyone should be allowed to correct those mistakes if possible. If you amend your tax return and you end up owing more money to taxing authorities such as the Internal Revenue Service or the California’s Franchise Tax Board, how does this affect the dischargeability of the taxes owed if you hire a bankruptcy attorney and file for bankruptcy?

If you amend your tax return you may be relieved to know that the amendment of your tax return does not change the filing date of the original return. Your tax return will still be considered to have been filed the first time you filed the tax return. For example: you have filed your 2005 tax returns on April 15, 2006. The IRS contacts you in 2009 to notify you that you have made a mistake on your return and you need to amend your tax returns. You file the amended tax returns on June 15, 2009. You file for bankruptcy on July 1, 2009. The 2005 tax debt should still be dischargeable because you filed the original tax returns more than 2 years prior to the filing of your bankruptcy case.

One thing to note is that if there are additional taxes assessed due to the amended tax return, those additional taxes will be subject to the 240 day assessment rule. For example: you owed $1,000 when you filed your 2005 tax returns on April 15, 2006. When you amended your tax returns on June 15, 2009, an additional $500 was assessed on June 30, 2009. If you filed for bankruptcy on July 1, 2009, the original $1,000 tax debt would still be dischargeable. The additional $500 taxes that were assessed would not be dischargeable yet. If you filed your bankruptcy case on February 26, 2010 or later, the entire $1,500 would be dischargeable. Taxes are complicated. Bankruptcy laws are complicated.