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Tax Help Hotline

IRS Tax Discharge

IRS Tax Discharge

In some limited cases, delinquent taxes can be discharged through a bankruptcy. There are two basic types of bankruptcy available: Chapter 7 and Chapter 13. There are very specific and complex rules in regards to discharging delinquent tax debt through a bankruptcy. At minimum, the following criteria must be met:

  • Tax returns were filed more than two years prior to the bankruptcy filing.
  • The tax liability was assessed more than 240 days prior to filing of the bankruptcy petition.
  • The liability is not due on Trust Fund Tax.
  • The taxpayer did not attempt to evade or defeat the tax, nor was the tax liability due to a fraudulent tax return.
  • The tax was not assessable at the time of the filing of the bankruptcy petition.
  • The tax was unsecured.
  • It has been more than 3 years since the returns were last DUE to be filed (including extensions).
  • The returns were timely filed or it has been at least 2 years since the returns were filed.