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:
- Filed a fraudulent tax return;
- Willfully attempted to evade the payment of taxes or the government’s collection of the tax debt;
- Failed to file a tax return;
- Filed an untimely tax return less than two (2) years before the filing bankruptcy;
- Government assessed the income tax less than 240 days before the bankruptcy case filing; or
- The tax return due date is less than three (3) years before the bankruptcy case filing.
Tax debt and tax resolutions can be complex. Therefore, you need a tax lawyer on your side. 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.