FAQ: Does Bankruptcy Clear IRS Debt?

Generally speaking, IRS debts are immune from being wiped out in bankruptcy. There are a few exceptions, but this is a general rule of thumb. However, there are a few situations where a bankruptcy can actually be used to clear an IRS debt. However several conditions must be met.

To eliminate an IRS debt in Chapter 7 bankruptcy, that debt must be:
– Federal income taxes. Other types of taxes or penalties as a result of fraud or mis-filing the return.
– You can not have committed fraud or willful evasion
– The debt must be a minimum of three years old
– You must have filed a tax return for that year (and it must have been filed a minimum of two years before your bankruptcy claim)
– You must pass the so called “240 day rule” meaning the IRS must assess the debt at least 240 days before you file bankruptcy or else not been assessed at all to that point

If these conditions are all met then there is a possibility of getting the tax penalty discharged in a bankruptcy. Otherwise, there is no way to have other tax debts discharged in any type of a bankruptcy filing.

Jessica Vaughn

Social media lover and beer specialist. Love cats.

Jessica Vaughn
About Jessica Vaughn 2 Articles

Social media lover and beer specialist. Love cats.

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