Can I discharge tax debt in bankruptcy?

Some tax debts can be discharged in bankruptcy, but strict rules apply.

Requirements for Discharge (Chapter 7)

All five conditions must be met:

1. Three-Year Rule: The tax return was due at least 3 years before filing bankruptcy
2. Two-Year Rule: The tax return was filed at least 2 years before filing
3. 240-Day Rule: The tax was assessed at least 240 days before filing
4. No Fraud: The return was not fraudulent
5. No Willful Evasion: You did not willfully attempt to evade the tax

What Cannot Be Discharged

• Trust fund taxes (payroll taxes withheld from employees)
• Tax liens that attached before bankruptcy
• Taxes from unfiled returns
• Fraudulent returns

Chapter 13 Bankruptcy

• Non-dischargeable tax debts must be paid in full through your repayment plan
• Dischargeable tax debts may be treated as general unsecured claims

Automatic Stay

Filing bankruptcy triggers an automatic stay that immediately stops IRS collection actions.

Important Disclaimer

This information is for educational purposes only and does not constitute tax or legal advice. Consult a qualified tax professional for advice specific to your situation.