This is a complex area intersecting bankruptcy law and tax law, which is why you have heard different advice. Some older taxes can be discharged in a Chapter 13 bankruptcy if the debt meets certain conditions. There is a multi-part test to determine if the tax is dischargeable that I won't go into here; however, if a nonfraudulent return was actually filed more than 3 years ago and the taxes were assessed more than 2 years ago and you never applied for an Offer in Compromise, there is a chance the taxes can be discharged in the bankruptcy. If your tax debt meets all the requirements, you will still pay something in the plan (so it's not erased), but any left over amounts not paid in the plan could be discharged at the end of the case.

Answer Applies to: New Jersey
Replied: 11/3/2011

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Income tax debt is dischargeable three years after filing the tax returns. In a Chapter 13 plan, these taxes become unsecured, unless IRS filed a tax lien. Then it depends on what assets you have that are encumbered by the IRS lien. You need to consult with a good bankruptcy attorney about your particular situation. It's complicated.

Answer Applies to: Illinois
Replied: 11/2/2011

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Yes, you can discharge tax debt in a Chapter 13 and repay tax debt without interest. It depends on the age of the tax debt and when the taxes were filed. For example, if you have tax debt from 2007 and you timely filed the tax return, then you could discharge that debt in a Chapter 13. However, if the tax debt is from 2008, then you could not discharge it, and instead, repay the tax debt without future interest or penalties. Tax debt in a Chapter 13 can be complicated so be sure to consult with a bankruptcy attorney.

Answer Applies to: Colorado
Replied: 11/1/2011

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Depending on the tax and the year, taxes are treated differently. If the return was in fact filed and the tax was for income taxes due for 1997 or before, then they are treated as unsecured debts and are paid whatever percentage all other unsecured debt (credit cards, etc.) are paid in the Chapter 13. If the tax was due in 2008, 2009, 2010 or 2011 it is a priority tax and must be paid 100% in the Chapter 13. If the returns were not filed for any year, the return must be filed and if the year is 2007 or before, AND if bankruptcy is filed within 2 years of the return being filed, it must be paid 100% in the Chapter 13.

Answer Applies to: California
Replied: 11/1/2011

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In general no, but there are some notable exceptions to the rule. EACH case is individually looked at before answering THAT question.

Answer Applies to: South Carolina
Replied: 11/1/2011

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Generally speaking income tax debts are not dischargeable unless they meet certain VERY SPECIFIC criteria set forth in the Bankruptcy Code. While there is far more to it than this, the easiest way to think of it is to ask if the debt is particularly old and the taxing authority (IRS or Massachusetts Department of Revenue) did not take steps to collect the debt such as placing a lien on your real estate. If the debt meets with these specific criteria, then the tax debt is deemed non-priority, and is dischargeable in bankruptcy in much the same way that a credit card would be discharged (in a Chapter 13, the non-priority tax liability would be partially paid, at the same rate as credit cards and medical bills). But watch out! Priority tax debts must be paid in full during the course of your plan. So, if you have $6,000.00 in priority tax debts and a 60 month plan (which is the maximum Ch. 13 plan length) your plan will need to allocate $100.00 per month to the tax debt. In either case (priority or non-priority) if you have a confirmed Ch. 13 plan you should come out of the case (assuming you reach discharge) with no remaining tax debt.

Answer Applies to: Massachusetts
Replied: 11/1/2011

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Income taxes must be at least 3 years old from the date the IRS or taxing agency assesses the tax. Taxes are tricky please see a lawyer about it.

Answer Applies to: California
Replied: 11/1/2011

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You must pay any non-dischargeable taxes(generally less than 3 years since due) in full over the life of the plan. Dischargeable taxes can be discharged in a chapter 7 or chapter 13 case.

Answer Applies to: Georgia
Replied: 11/1/2011

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You have heard conflicting things because some taxes are dischargeable and some are not. Go to your local IRS office and get "plain English transcripts" for the years in question. Take those transcripts to a knowledgeable bankruptcy lawyer. A good lawyer will be be able to tell what is dischargeable based on the transcripts.

Answer Applies to: California
Replied: 11/1/2011

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The answer is it depends. How old, what type and have you had any settlements with the IRS.

Answer Applies to: Florida
Replied: 11/1/2011

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Certain taxes can be discharged or compromised in Bankruptcy. If the taxes are three years or older, the service has made a final assessment and the return or returns were truthful and accurate, then the income tax or taxes can be discharged or compromised in a Chapter 13 Bankruptcy. In looking at the age of the tax obligation, you calculate the three years from the due date. For instance, any income tax from 2007 going back could be discharged or compromised in a Chapter 13 Bankruptcy, as the due date would have been April of 2008. If a return was not filed timely, it must have been filed for at least two years in addition to the taxes being three years or older.

Answer Applies to: Georgia
Replied: 11/1/2011

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First of all, you mean a Chapter 7.Second, if you filed your taxes on time and at least two years have passed since the filing date and there wasn't an audit in the meantime and you haven't had a repayment arrangement with the IRS, the taxes should be discharged.

Answer Applies to: Illinois
Replied: 11/1/2011

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Yes. In fact, taxes that are older than 3 years old are considered a "non-priority, unsecured" debt and get the same treatment as your average credit card debt. They are dischargeable. Taxes less than 3 years old must be paid.

Answer Applies to: Virginia
Replied: 11/1/2011

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The general rules are that in order discharge (eliminate) the tax debt, the tax return must have been due at least three years prior to filing the bankruptcy, you must have filed the tax return at least two years prior to filing the bankruptcy, the tax must have been assessed at least eight months prior to filing the bankruptcy, and there cannot have been an attempt to evade the tax. There are certain activities, such as an offer in compromise or prior bankruptcy that can stop the running of the time periods. There are many other details to know in order to make a determination. An experienced bankruptcy attorney can obtain a special type of tax transcript in order to make the determination. If the tax tax cannot be discharged, it can still be included in a chapter 13 case. The tax must then be paid in full through the chapter 13 plan, but the chapter 13 case stops further interest charges and the tax penalty may not have to be paid in full.

Answer Applies to: Minnesota
Replied: 11/1/2011

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Sometimes it can and sometimes it can't. It usually depends upon the tax years involved and when you filed your returns. The filing of a tax lien can also complicate the situation.

Answer Applies to: Texas
Replied: 11/1/2011

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Some tax debt is dischargeable in a bankruptcy. It all depends on how it is classified. General unsecured tax debt will be treated as all other general unsecured claims in a Chapter 13 bankruptcy.

Answer Applies to: Georgia
Replied: 11/1/2011

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That is a complicated question and depends on how old the tax debt is and if you are filing a 100% plan or not. Old tax debt is easier to discharge in a chapter 7, but is possible under specific circumstances in a chapter 13.

Answer Applies to: New York
Replied: 11/1/2011

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Some taxes (primarily older taxes) can be discharged. Priority tax debt must be paid through your Chapter 13 plan.

Answer Applies to: Colorado
Replied: 11/1/2011

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Federal tax debt more than 2 years old can be discharged in some situations.

Answer Applies to: New York
Replied: 10/31/2011

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Some taxes are dischargable in bankruptcy if they are over 3 years old and have not been assessed in the last 240 days.

Answer Applies to: Indiana
Replied: 10/31/2011

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Some but not all tax debts are dischargeable. You need a lawyer to sort it out as several tests must be met.

Answer Applies to: Georgia
Replied: 10/31/2011

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In certain situations income taxes that are more than 3 years old can be discharged in bankruptcy. Consult an attorney as thus situation is complicated.

Answer Applies to: California
Replied: 10/31/2011

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You can discharge tax debts in both Chapters 7 and 13 but it has to meet the requirements such as more than 3 years old, tax filed at least two years ago, tax debt assessed, honest tax return, no agreements with the IRS that would stop the waiting time from being stopped, etc. This is a highly complex areas so you need to have a consultation with an experienced bankruptcy attorney and should get a tax transcript and a tax return transcript for each year you owe taxes before seeing the attorney. You can call the IRS to get the tax account transcript or request it online at the IRS website.

Answer Applies to: California
Replied: 10/31/2011

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Regardless of a Chapter 7 or Chapter 13, personal taxes older than 3 years from the date the IRS has made its final disposition of the tax liability becomes ripe for discharge. In a Chapter 13, the old tax debt can be included in your pool of unsecured creditors. If it is not older than 3 years old, then it is handled as a priority debt and is normally included in your plan payment.

Answer Applies to: Georgia
Replied: 10/31/2011

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The reason why you've heard conflicting accounts is because whether or not income tax debt can be discharged by a bankruptcy depends on quite a few different factors. If you never filed a tax return for the years that the IRS is trying to collect, then it's probably not dischargeable. If the IRS is trying to collect for taxes from the last three years, then it's not dischargeable yet it might be in the future. In general, the rules regarding discharging income tax debt are extremely complicated.

Answer Applies to: Oregon
Replied: 10/31/2011

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Like in Chapter 7, some taxes are dischargeable in Chapter 13 and some are not. The first question to determine what taxes are dischargeable in any chapter (including Chapter 13) is whether a tax return was due in the two years prior to filing your bankruptcy. If the answer is yes, then they are NOT dischargeable. If the answer is no, then they may be dischargeable unless, among other things, you received an assessment in the 240 days before filing your petition or a tax lien was already recorded. If your taxes are dischargeable, in a Chapter 13 case (unlike the situation in a Chapter 7 case in which you pay nothing), you may still have to pay from 0% to 100% of it, depending on your income and family size, etc. As to taxes that cannot be discharged in any chapter, in a Chapter 13 case, they enjoy priority over other types of debt. What that means is that if all you can pay is your priority or secured taxes, you first pay those before allocating to other debts with less priority any of the funds you have left-over at the end of the month after you pay your reasonable living expenses. At the end of your plan, the tax debt has been satisfied and the rest of your debt is also discharged. Nevertheless, it is difficult to answer whether taxes in your particular case are dischargeable without knowing all the facts of your case. If the above seems confusing, it is not surprising as even most bankruptcy attorneys wrestle with those concepts.

Answer Applies to: California
Replied: 10/31/2011

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If it's older than 3 years, I.e. prior to 2008 yes, if not no. 2008 tax debts can be erased if you wait until 2012 to file.

Answer Applies to: Florida
Replied: 10/31/2011

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It depends. The taxes must be more than 3 years old, a timely return filed, or the assessment if any must be more than 240 days old.

Answer Applies to: Nevada
Replied: 10/31/2011

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They would be paid through your Chapter 13 plan and at the end of the plan they would be discharged because they have been paid.

Answer Applies to: California
Replied: 10/31/2011

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If the IRS has made no effort to enforce the tax debt for three years, then at the end of the Chapter 13 plan the remaining debt will be discharged. If the tax debt is for taxes which were assessed within the 3 years preceding the filing of the bankruptcy, then they will not be discharged if not paid in full by the plan.

Answer Applies to: California
Replied: 10/31/2011

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Yes, if the plan properly addresses the priority or secured portion of the debt.

Answer Applies to: Michigan
Replied: 10/31/2011

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Income taxes can be discharged in a 7 or 13 if you meet the criteria. Generally, 3 years old, filed the return at least 2 years ago, no fraud, tax evasion, etc. You'll probably not get a definitive answer without getting a consultation. Good luck!

Answer Applies to: California
Replied: 10/31/2011

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Great question! No, taxes are not dischargeable in a Ch 13. (There are some exceptions, but I am simplifying for purposes of this e-mail. You need to talk to an attorney who is knowledgeable in this area.) But Ch 13 is a great way to deal with taxes. Taxes are priority debts, which means they get paid first through your Ch 13 plan. It gets really complicated. Talk to an experienced Ch 13 attorney (That means one who does not advertise $599 bankruptcies.)

Answer Applies to: Colorado
Replied: 10/31/2011

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Some taxes are dischargeable in bankruptcy and some are not. Many factors go into analyzing whether a particular tax debt will be discharged. This is a very complex area of the bankruptcy code.

Answer Applies to: Colorado
Replied: 10/31/2011

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Income taxes are dischargeable if they are due more than 3 years ago, the returns have been filed for 2 years and the taxes have been assessed for at least 240 days. If they qualify on these three bases, they are dischargeable in either a Chapter 7 or 13. If they are not dischargeable, you can pay them over 5 years in a Chapter 13 with no additional penalties or interest.

Answer Applies to: Colorado
Replied: 10/31/2011

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