Does filing bankruptcy discharge federal Tax Debts?
Does filing bankruptcy discharge federal IRS tax debts? Yes, some federal IRS tax debts can be discharged in a personal bankruptcy. Bankruptcy Code Section 523 provides exceptions to the general discharge order entered pursuant to Section 727 (Chapter 7) or Section 1328 (Chapter 13). Section 523(a)(1) does not discharge a taxpayer from income tax debt if the taxpayer violates any of the following 6-part test:
- Taxpayer filed a fraudulent tax return;
- Taxpayer willfully attempted to evade the payment of taxes or the government’s collection of the tax debt;
- Taxpayer failed to file a tax return;
- Taxpayer filed an untimely tax return less than two (2) years before the bankruptcy case was filed;
- Government assessed the income tax less than 240 days before the bankruptcy case was filed; or
- The tax return due date was less than three (3) years before the bankruptcy case was filed.
Chicago tax lawyer and CPA Brian J. Thompson offers tax debt relief via installment agreements and offers-in-compromise. Brian@BrianThompsonLaw.com or 773-307-0181.