Considering Bankruptcy to Discharge Your Tax Debt? Timing Is Everything

Facing a problem with the Internal Revenue Service (IRS) is a scary proposition. Unfortunately, many people find themselves caught in this position at some point in their lives. If you have a tax debt issue, alternative solutions may be available to help you resolve the problem and move on with your life. One such possible solution is to file for Chapter 7 or Chapter 13 bankruptcy. Some, but not all, tax debts are capable of being discharged in a bankruptcy proceeding. To qualify, your tax debt must meet some important criteria.

Does Your Tax Debt Meet the Criteria for Bankruptcy?

When it comes to using bankruptcy proceedings as a solution to a tax problem, timing is very important. One of the criteria that a tax debt must meet in order to be eligible for discharge during a bankruptcy is that the tax assessment in question must be at least 240 days old. That means that the IRS must have assessed the tax at least 240 days before you filed for bankruptcy. This tax assessment may arise in any of the following ways:

  • A self-reported balance due
  • A final determination by the IRS during an audit
  • An assessment proposed by the IRS that has now become final


An experienced attorney can help you assess whether your tax debt might be eligible for discharge in a bankruptcy proceeding and whether this may be a viable solution for your problem. In addition to meeting the tax-assessment requirement, the tax return related to the debt must have been filed at least two years ago, it must have been due to be filed at least three years ago, and it cannot have been a fraudulent return. You also cannot be guilty of tax evasion.

Before tackling an IRS tax problem, it is important to arm yourself with information. We encourage you to get started by reading our free book entitled The Ultimate Survival Guide for IRS Problems. This guide provides a valuable overview of the potential solutions that may be available to you. And if you have specific questions about your unique situation, contact us at your convenience using our live chat.