Tennessee Bankruptcy Law (TN)

Information about taxes under Tennessee law and the discharge procedure

After filing, all liabilities must be disclosed to the court through written forms and schedules. Frequently, legal questions arise regarding the existence of a bona fide debt vs. a contingent claim, vs. an utterly unfounded allegation of liability. These issues are resolved under Tennessee bankruptcy law.

State and local taxes are considered priority debts that receive a special preference above all secured and general classifications. In chapter 7, this means that taxes, both assessed and un-assessed, whether filed or not, become non-dischargeable. As a non-dischargeable debt, amounts owed remain payable as if completely excluded from the case. Taxing authorities may file a motion to lift stay and are usually granted authority from the court to resume collection actions, conduct seizures, and prosecute taxpayers for evasion. However, be aware that Chapter 13 dispose of tax claims differently, in that claims may be included within the proposed plan and paid over time. This inclusion acts as an extension of the legal payment period and prevents seizures, levies and prosecution for tax evasion. Debtors who owe back taxes and find themselves subject to prosecution find a ready source of relief assistance available through Chapter 13.