Chapter 7 Discharge Exceptions: Income Taxes

It is extremely difficult to get any federal or state debt discharged.  Federal income taxes are no exception; however there are limited cases in which a debtor may be allowed to discharge this debt.    Below is a list of factors considered when determining whether or not a debtor is eligible for a discharge of federal income taxes:

1. Debtor must have filed taxes with the IRS for the previous four years
2. Taxes must be based on income, not penalties or other tax generators
3. Debtor must not have committed fraud or willful evasion
4. Income tax debt must be at least three years old prior to filing for Chapter 7
5. Debtor must have filed a tax return for the debt he/she is proposing to discharge
6. 240 days must have passed since the IRS assessed the debt OR the IRS has not assessed the debt yet

As in any scenario involving a bankruptcy filing individual facts and circumstances may vary. This list is just a general guideline and is in no way meant to be comprehensive.  Experienced counsel is there to assess your particular facts and determine how the laws apply to your situation. For more information on discharging federal income tax debt, contact a knowledgeable Fears | Nachawati attorney.