Lance Drury Law
Ste. Genevieve 573-883-3056
Columbia 573-886-8900
St. Louis 314-200-0003

A Guide To Taxes That Can and Cannot Be Eliminated in Chapter 7 Bankruptcy

When bankruptcy is the only route to take in the face of overwhelming debt, it is important to be aware that some tax debt may be discharged while other taxes are not eligible for discharge. Most tax debt is eliminated under Chapter 7 Bankruptcy while Chapter 13 Bankruptcy requires a payback plan. Use this review of taxes that can and cannot be eliminated as a guide, and always retain the most experienced tax resolution attorney you can find to help you navigate the sea of paperwork and filing requirements.

Determinations That Allow Tax Discharge.

The Law allows certain tax debts to be discharged in Chapter 7 Bankruptcy. In most instances Chapter 7 is where you will find the most and often the only allowances for the elimination of tax debt. The discharge of any tax is determined according to several different factors including the type of tax, how old the tax debt is, if the debtor filed a return, and the type of bankruptcy.

Federal income taxes in Chapter 7 are dischargeable if all of the following conditions have been met:

  • If you filed a tax return for the relevant tax years at least two years before filing for bankruptcy.

  • If the tax debt is from a tax return that was originally due at least three years before filing for bankruptcy.

  • If The IRS assessed the tax debt at least 240 days before the debtor filed for bankruptcy. If the IRS suspended collection activity during negotiation, the applicable date may be extended.

  • If you did not commit willful tax evasion. Possible evasive actions include changing your Social Security number, your name,

  • If the discharge is for income taxes. Payroll taxes and penalties for fraud are not eligible for discharge.

Taxes That Cannot Be Eliminated in Chapter 7 Bankruptcy.

If you have tax debts from unfiled tax returns, you will not be able to eliminate this debt through bankruptcy. In addition, Trust Fund taxes or withholding taxes from an employee’s paycheck do not qualify for elimination under bankruptcy law.

No Comments

Leave a comment
Comment Information

As Seen On

NBC ABC Fox News Channel USA Today BIO - The Biography Channel CBS
NBC ABC Fox News Channel USA Today BIO - The Biography Channel CBS

Schedule a No Obligation Tax Consultation

Contact us today and get relief from your tax burden. You can also receive a FREE chapter from the best-selling book, Protect and Defend, just by requesting it from the form below.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

The Law Firm of Lance R. Drury
150 Merchant Street
(By Appointment)
Ste. Genevieve, MO 63670

Phone: 314-200-0003
Fax: 573-883-3095
Ste. Genevieve Law Office Map

Columbia Office
3610 Buttonwood Drive, Suite 200
(By Appointment)
Columbia, MO 65201

Phone: 314-200-0003
Phone: 573-886-8900
Fax: 573-886-8901

St. Louis Office
3636 South Geyer Road, Suite 100
(By Appointment)
St. Louis, MO 63127

Phone: 314-200-0003
Fax: 314-238-7201

Facebook Twitter You Tube Linked In Rss Feed
Review Us

Back to Top

"The choice of a lawyer is an important decision and should not be based solely upon advertisements."

- Lance

Privacy Policy | Business Development Solutions by FindLaw, a Thomson Reuters business.