Posted: March 19, 2020




Are IRS tax debts dischargeable in a bankruptcy filing?



This is a very common question when contemplating filing for bankruptcy. While usually most general unsecured debts are dischargeable, that is not always the case with tax debt. Sometimes the IRS will work out a payment plan with you to pay off your tax obligations over time, and you can resolve it that way, but for some people that is not a realistic option and they are forced to declare bankruptcy. In order to have your tax debts discharged in a bankruptcy, certain criteria must be met. First, the taxes must be income tax. Payroll taxes, for example cannot be wiped out in a bankruptcy. Second, the tax liability must have been assessed by the IRS at least 240 days before your bankruptcy or not assessed yet. Third, a tax return must be filed for the debt you are trying to eliminate at least two years prior to your bankruptcy filing. Fourth, your tax debt cannot be a result of any fraudulent activity, such as not reporting income on your tax returns. And finally, the debt has to be over three years old from when you file bankruptcy.  All of these requirements must be satisfied in order to have your tax liabilities discharged. Keep in mind, however, that if the IRS files a federal tax lien prior to your bankruptcy, even though your personal obligation for the debt may get discharged, the lien will remain post-bankruptcy. This means that if you own real property, there will still be a lien on that property.

            It is important to consult with an experienced bankruptcy lawyer to go over all of your options and to understand your rights.



For assistance with all Bankruptcy matters, please contact us:

Ken Kirschenbaum, Esq.    (516)-747-6700 Ext. 301 or

Stacy Spector, Esq.    (516)-747-6700 Ext. 304 or