Latest News About Can You File Bankruptcy On Tax Debt

Bankruptcy can sometimes discharge certain tax debts, but it doesn’t automatically wipe out all IRS/state tax you owe—and some taxes are generally not dischargeable at all.[2]

What “can” be discharged (often)

For personal income tax debts in Chapter 7, discharge usually depends on timing and other factors (commonly summarized as: the tax return was due more than 3 years before filing, the return was filed more than 2 years before filing, the IRS assessed the tax more than 240 days before filing, and no fraud/evasion).[2]

What often cannot be discharged

• Payroll taxes (and certain trust-fund type taxes) are generally not dischargeable in bankruptcy.[5]
• Taxes related to fraud or willful tax evasion are generally excluded from discharge.[2]
• If your tax situation involved late or problematic filing, discharge may fail—courts have held that late-filed returns may not qualify as a “return” for bankruptcy discharge purposes in some circumstances.[1]

Chapter 13 vs Chapter 7 (why it matters)

• Chapter 7 may discharge qualifying income tax debts (per the rules above).[2]
• Chapter 13 typically doesn’t “discharge” taxes in the same way; instead, it can allow you to repay them through a court-approved plan, often depending on whether the tax claims are treated as priority/nonpriority.[3]

Practical next steps

1. Identify the tax type: income tax vs payroll/trust fund vs penalties/interest.
2. Gather key dates: when the return was due, when it was filed, and when the IRS made the assessment.[2]
3. Talk to a bankruptcy attorney (especially one familiar with IRS discharge rules) because a small timing issue can change the outcome.[2]

If you tell me (a) whether it’s IRS income tax or payroll taxes, (b) roughly what year the debt relates to, and (c) whether/when you filed the returns, I can explain how the general discharge rules are usually applied to your fact pattern.