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IRS Taxes and Bankruptcy Protection

  • By: Christopher Benson
  • Published: March 4, 2010
There are a few misconceptions about the interplay of IRS Taxes and Bankruptcy.

A. IRS Taxes are dischargeable in bankruptcy if a 3-Part Test can be satisfied:

  1. If the taxes owed are for a taxable year more than 3 years from the date of filing bankruptcy; and
  2. The tax return has actually been filed for at least 2 years prior to filing bankruptcy; and
  3. The IRS has assessed the taxes at least 240 days prior to filing bankruptcy.
  4. If all 3 prongs of the test are satisfied, the tax debt can be discharged in bankruptcy.

If all 3 prongs of the test are not satisfied, you can still file a Chapter 13 Plan to provide for payment of the tax obligation spread out over 3 years.

Bankruptcy protection is a useful legal right that people can use to get their lives back on track. For more information call (253) 815-6940

Christopher Benson

About the Author Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More