Sometimes, Tax Debt Can be Discharged

It is a widely known fact that bankruptcy does not discharge all debt.  Tax liens and domestic support obligations are well known.   However, in some rare cases income tax debt may be discharged in a Chapter 7.   Although each petition is judged on a case by case basis, the following are a few factors that determine whether or not an income tax debt may be considered for discharge:

• ·     Must be income taxes.   Other types of taxes, such as payroll taxes, are not included.
• ·      You are current on filing your income tax returns.
• ·      The debt is at least three years old.
• ·      You pass the “240 day rule”, meaning the debt must have been levied by the Internal Revenue Service at least 240 days prior to filing Chapter 7.
• ·      No fraud or willful evasion has been committed.