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Taxes and Bankruptcy – Two Not so Fun Topics


The Golden Rules to Discharge Taxes:

If you choose to file a Chapter 7 bankruptcy, your tax debt could be discharged if you meet the following tests:

  1. The taxes must be for income.
  2. The tax debt must be at least 3 years old (including extensions).
  3. You must have filed the return at least two years before filing for bankruptcy.
  4. The tax was assessed at least 240 days prior to filing for bankruptcy (known as the 240 day rule).
  5. You have not purposely evaded paying taxes.

Certain taxes are non-dischargeable and will survive a bankruptcy.  This would include real property taxes that are less than one year old, sales taxes, payroll taxes, and tax penalties that are less than three years old.


Deciding whether a tax debt can be discharged should be left to an expert.  We often employ a tax attorney in our bankruptcies to make sure that the timing of the bankruptcy will discharge the most taxes.  If you have a tax problem that could be resolved in a bankruptcy, it’s important to speak with a lawyer first. There are many options that can help you find a solution and get you the fresh financial start you deserve.  See our website at Arkovich Law. for further information and check out what our clients are saying about us on Avvo reviews!


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