Discharging Tax Debt in Bankruptcy

Discuss Your Options With a Jacksonville Bankruptcy Lawyer

The bankruptcy attorneys of Owenby Law, P.A. offer individuals and families innovative ways to reestablish their monetary footing during a financial crisis. Many people never consider filing for Chapter 7 or Chapter 13 bankruptcy because the bulk of their debt is comprised of back taxes and IRS penalties, which they have heard are non-dischargeable. As long as certain criteria are met, however, money owed to the Internal Revenue Service may be discharged in Chapter 7 or Chapter 13 bankruptcy.

To learn more about discharging tax debt, call (904) 770-3141 to speak with a bankruptcy attorney at our Jacksonville or Orange Park office.

IRS Criteria for Discharging Tax Debt in Bankruptcy

Income tax debt must meet the following five rules for it to be discharged in either Chapter 7 or Chapter 13 bankruptcy:

  • The due date for filing the tax return must be at least three years old. Recent tax debt does not qualify.
  • The tax return must have been filed at least two years prior to the declaration of bankruptcy.
  • The taxes must have been assessed by the IRS at least 240 days (approximately eight months) prior to filing bankruptcy.
  • The tax return cannot have been fraudulent.
  • The individual declaring bankruptcy cannot be guilty of tax evasion.

Not every individual's tax debt is immediately dischargeable, but in many cases, by postponing the bankruptcy filing by a few months, our attorneys are able to get all or some of our clients' tax debt discharged. And the difference is often substantial. Contact Owenby Law, P.A. immediately for a full assessment of your financial predicament.

Request your FREE Initial Consultation

One of the most common reasons individuals declare Chapter 7 and Chapter 13 bankruptcy is because they have been hit with substantial IRS back taxes and penalties. Bankruptcy can give individuals and families an opportunity to start over without the weight of an untenable monthly payment plan or having a lien placed on their real property. If you are in financial crisis due to an IRS tax assessment, you need to act quickly.

Contact our firm to discuss your case during an initial consultation.