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Will Filing A Chapter 7 Bankruptcy Wipe Out IRS Debt?

My spouse and I owe the IRS quite a bit of money in unpaid federal income taxes. We have tried to pay this down, but some of it is quite old. Can this be discharged through filing a Chapter 7 bankruptcy?

Answers (1)

In some cases, filing for a Chapter 7 bankruptcy will discharge federal incomes tax only when the following conditions are met:

You did not commit fraud or willful tax evasion
The debt is more than three years old
You filed a tax return for the debt in question at least two years prior to filing bankruptcy
You pass the “240-day rule”, which means that the income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet.

Filing for a Chapter 7 bankruptcy will wipe out your personal obligation to pay the debt, and prevent the IRS from going after your bank account or garnishing your wages. However, if the IRS recorded a tax lien on your property before you field, the lien will remain on the property. To obtain specific information about your case, you should seek advice from a qualified bankruptcy attorney.

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Posted by Linda Adams on 21 Jan 2010

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