Back Taxes & Bankruptcy

Under some circumstances, back taxes may be discharged in bankruptcy

Back taxes are typically not eligible to be removed or "discharged" under bankruptcy, but there are some circumstances that can allow a discharge to happen if particular rules are met.

Different Types of Bankruptcy

Individuals can file for a Chapter 7 or Chapter 13 bankruptcy, each with its own benefits. Under new laws taxes are handled the same for both.

Tax Debts are Associated with a Particular Filing Year

Rules to discharge debt are specific, and apply not to your entire tax debt, but to debts from particular years.

Date the Filing was Due and Date Filed

Debt must be from a return that was due three years prior to bankruptcy and filed at least two years prior.

240 Days Old

The assessed tax must be at least 240 days old prior to the taxpayer filing for bankruptcy.

Fraud and Guilt

To have taxes discharged, tax returns cannot be ruled to be fraudulent nor can the filer be guilty of tax evasion.

Unfiled Returns

Debt from unfiled tax returns is not dischargeable.

References

• IRS bankruptcy tax guide