What it is
Bankruptcy is a court process for people who can’t pay their debts. When a debt is discharged, it’s wiped out. You no longer owe it.
Most people hear that taxes can never be discharged. For some taxes, that’s true. But older income tax debt sometimes can be, if it passes strict timing tests. We list those tests below.
First, is the IRS bill right?
Before anyone talks about bankruptcy, we check what you really owe. Sometimes the bill is built on a return the IRS filled in, or has penalties that should come off. The real number might be small enough to handle another way. Or it might change which years matter.
Who it fits
- Your tax debt is mostly income tax, not payroll tax.
- The years are older, and you filed real returns for them.
- You have other debts, too, and you’re already thinking about bankruptcy.
- Other ways out, like a payment plan or a settlement, don’t fit.
What we do, and what your attorney does
We’re not bankruptcy lawyers. We don’t file the case, and we don’t give bankruptcy legal advice. Here’s our part:
We pull your IRS records. They show when each return was due, when it was filed, and when the tax was charged. Those dates decide everything.
We tell you which years may qualify. Year by year, we check the timing tests. We also flag anything that could cause trouble, like a late return.
We work alongside your bankruptcy attorney. We share what we find, so they can pick the right timing and chapter. We can keep handling the IRS side after the case, too.
How long it takes
Checking the tax dates usually takes a short time once we have your IRS records. The bankruptcy case itself is up to your attorney and the court. Sometimes the best move is to wait a few months for more years to qualify.
What can go wrong
The case is filed too soon. Miss a date by even a few days, and that year’s tax can stay with you.
Late-filed returns. The law says a return must meet the normal filing rules to count. Courts disagree about what that means for a return filed late. Some courts say a late return never counts.
The lien stays. A federal tax lien is the IRS’s legal claim on your property. If the IRS filed one before your case, it can survive bankruptcy. It may stay on your home or other property you owned before the case, even if you no longer owe the tax yourself.
Not every tax qualifies. Payroll taxes taken from workers’ pay, recent taxes, and taxes tied to fraud generally stay.