Bankruptcy & Tax Relief

Can Bankruptcy Eliminate Tax Debt? Sometimes—With the Right Strategy.

For individuals burdened with unmanageable tax liabilities, bankruptcy may offer a path to meaningful relief. In certain situations, back taxes, penalties, and interest can be discharged—providing a much-needed financial reset and a chance to rebuild.

However, discharging tax debt through bankruptcy is not automatic. The IRS and bankruptcy courts impose strict eligibility rules, and only certain tax obligations qualify. For example, income taxes may be eligible under Chapter 7 or Chapter 13 bankruptcy, but only if:

• The tax debt is at least three years old

• The return was filed at least two years prior

• The tax was assessed at least 240 days before filing

• There was no fraud or tax evasion involved

• The individual is personally liable for the debt

Why Pre-Bankruptcy Planning Matters

Filing bankruptcy without understanding these rules can lead to unpleasant surprises, such as:

• IRS collections resuming after discharge

• Certain tax debts surviving the bankruptcy process

• Increased legal and financial complications

Strategic planning before filing allows you to align your timing and documentation to meet eligibility thresholds—and avoid unnecessary setbacks.

How We Help

Our team works closely with clients and their bankruptcy attorneys to:

• Evaluate the dischargeability of tax debt under current IRS and bankruptcy rules

• Time your filing to maximize discharge potential

• Organize and review prior tax filings and IRS account transcripts

• Assess alternatives, such as Offers in Compromise or Installment Agreements, if bankruptcy isn’t a fit

Bankruptcy Isn’t a One-Size-Fits-All Fix

While powerful, bankruptcy isn’t the right solution for every tax problem. That’s why it’s essential to evaluate all options carefully with experienced guidance.

📞 Contact us today to schedule a confidential consultation. We’ll help you determine whether bankruptcy is a viable solution—or if a better path forward exists.