Older Back Taxes & Bankruptcy

Income tax debts aren’t automatically wiped out in bankruptcy, but older liabilities may qualify for discharge if they meet the so‑called 3‑2‑240 rule. To be dischargeable, the tax return must have been due at least three years before the bankruptcy filing (including extensions) and actually filed at least two years before the petition. In other words, you must be up‑to‑date on filing and allow enough time to pass before seeking relief.

Additionally, the IRS must have assessed the tax at least 240 days prior to filing or not assessed it at all. Tax debts associated with fraud, willful tax evasion or certain penalties remain non‑dischargeable. Property tax liens may also survive the bankruptcy even if the underlying debt is discharged. The rules are complex and timing is critical—an untimely filing could mean the difference between discharging the tax and having to pay it in full.

We will review your IRS transcripts, determine whether your back taxes meet the 3‑2‑240 criteria and advise you on the best strategy. In some cases, a Chapter 13 plan may allow you to repay non‑dischargeable taxes over three to five years without additional interest or penalties. Contact us to evaluate your tax situation and explore your options for relief.