Guiding you through life’s unexpected legal obstacles.

Income tax debts may be dischargeable (wiped out) in Chapter 7 or Chapter 13 Bankruptcy.  Chapter 7 provides for a complete discharge while Chapter 13 provides a payment plan to repay some, and the remainder is discharged.

There are five conditions that all must be met to discharge income taxes in a bankruptcy.

1. A tax return has been filed.  (relating to the income tax due)
2. The due date for filing a tax return is at least 3 years ago with extensions
3. If filed late, the tax return was filed at least two year prior to the bankruptcy petition.
4. Tax liability from IRS was assessed at least 240 days ago prior to the bankruptcy petition.
5. Tax return is not fraudulent nor is the tax payer guilty of tax evasion.

In some cases, the IRS may have a obtained a tax lien on your property.  This may have an effect on the amount discharged for income taxes.  If the lien has been properly attached to your property, the IRS may be a secured creditor to the extent of your available property.

This area of law is complicated.  You should review the matter with a bankruptcy attorney who can advise you whether the tax debt that you owe is dischargeable.