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Discharging Personal Tax Debt Under Chapter 7

On Behalf of | Jan 12, 2018 | Chapter 7 bankruptcy

If you owe personal taxes that you cannot feasibly pay, you may qualify to discharge some or all of that debt through a Chapter 7 bankruptcy. However, like all things involving federal taxes, there are a number of very strict standards you must meet. While meeting these standards and qualifying for a Chapter 7 discharge is not simple or easy, it is a possible avenue of relief, and every option is important to consider.

In order to qualify for a discharge of tax debt through Chapter 7, a debtor must

  • Only attempt to discharge personal tax debt
  • File a legitimate tax return for the years in which the tax debt accrued at least two years before filing for bankruptcy
  • File for relief from a tax debt at least three years old
  • Be eligible to file for relief at least 240 days after the Internal Revenue Services assessed the tax debt

Also, the debtor must not commit tax evasion or commit tax fraud before seeking the discharge.

If you do qualify for the discharge, you may also qualify to discharge not only the initial tax burden but also associated fees and penalties. Once the discharge completes, you do not owe the tax debt any longer.

Even if you meet all these conditions, bankruptcy is not an easy or simple process. It is wise to seek out professional counsel from an experienced bankruptcy attorney who can help guide you and ensure that you receive all the benefits and protections that you deserve while you take the steps necessary to create a fresh start with the relief that you need.