What Happens To My Federal Tax Debts?

A. It depends whether you file a Chapter 7 or a Chapter 13. A Chapter 7 debtor can wipe out federal income taxes if all the following are met: the IRS had not filed a prior tax lien on the assets you own (if they have, the lien survives bankruptcy, which means that the government may still seize property to collect the discharged tax debts); you didn't file fraudulently or try to evade paying your taxes; your liability is for a tax return filed at least two years prior to the bankruptcy; the tax return was due more than three years ago; and tax deficiencies that were assessed on prior returns were assessed at least 240 days prior to the filing of the bankruptcy. In a Chapter 13 filing, you'll pay the IRS as part of your repayment plan.

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