What are the rules for discharging old tax debts in Chapter 7 bankruptcy?

There are generally five rules associated with discharging old tax debts in Chapter 7 bankruptcy.   These are as follows:

1. The due date for filing a tax return is at least three years old, including any extensions.
2. The tax return was actually filed at least two years ago.  This also means that the tax return has to have been filed at some point.  If you have not filed yourself then it cannot be discharged.
3. The last tax assessment is at least 240 days old.  Assessments are just what they sound like, re-determining what you owed in taxes.
4. The tax return was not fraudulent.  Some examples, where it may be considered fraudulent are if it was not filed at all, if filed incorrectly and there was a determination of fraud, or filed trying to hide or keep income from being taxed.
5. The taxpayer is not guilty of tax evasion.

The first step to determine whether it is dischargeable or not, is to usually order your tax transcripts.  We can do this for you by having you sign a form 8821 allowing us to receive your transcripts directly.  This will have the last assessments, date of filing, date due, any extensions, and other information that is helpful in determining whether the tax debts are generally dischargeable.  Many times the IRS has already made a determination that the taxes are uncollectable, and if this is the case then, for practical purposes, they are not usually going to attempt to collect from you by using such methods as garnishments, etc.  These are just the general rules and tax debts are generally not dischargeable (like student loans and child support), but by seeing a bankruptcy attorney you can make a decision whether bankruptcy is right for you.