Bankruptcy Tax, Discharging IRS Taxes

We Help Clients Discharge Tax Debts in Bankruptcy

Taxpayers are often under the mistaken belief that their tax liabilities are not dischargeable in bankruptcy. Taxes can be discharged in bankruptcy.

Generally, older Federal income tax debts are dischargeable in bankruptcy. By “older” we are referring to tax debts more than three years old and for which the tax return, if one was to be filed, was filed more than 240 days prior to filing the bankruptcy petition.

Discharging taxes in bankruptcy may not be the only benefit of filing bankruptcy. Other benefits can include:

1. Stopping the IRS collection efforts. Filing a bankruptcy petition typically stops the IRS’s collections activities. Therefore, bankruptcy may be a viable option to prevent the IRS from levying on wages or other assets.
2. Discharging some IRS tax penalties in bankruptcy.
3. Stopping the accrual of interest on unpaid tax debts during the bankruptcy proceeding.

These are just a few examples.

If the tax debt and penalties are not dischargeable in bankruptcy, then it is still possible that the tax debt and penalties can be restructured in bankruptcy. The bankruptcy payment plan may be better than the alternative payment plan afforded by the IRS.

There are also several disadvantages to filing bankruptcy that must be considered, however. One such disadvantage is that the IRS’s liens may survive the bankruptcy process. This can be problematic if there are assets that are excluded from the bankruptcy (such as retirement accounts) rather than exempt assets (such as personal residences, etc.). The lien will continue to attach to the excluded (not exempt) assets even though the taxpayer’s personal liability for the unpaid tax debts is discharged in bankruptcy.

The IRS’s post-bankruptcy collections activities can also be problematic. To the extent that all of the tax debt is not discharged in bankruptcy, the IRS may view the taxpayer (who now has fewer debts) as being in a better position to pay the IRS.

The bankruptcy tax laws are constantly changing. An experienced tax attorney who follows this area of law can help you determine if bankruptcy is a viable option for resolving your tax debt.

Please call us at (713) 909-4906 or contact us online to schedule an appointment.

More Information About Discharging Taxes in Bankruptcy

Call Now, We Can Help!


(713) 909-4906

Do you have a tax dispute, under audit by the IRS or state tax authorities, or just have a tax question? We want to hear from you. Call today for a free, confidential, consultation. If you are pressed for time, you can also use the contact form below to reach out to us.

Our Recent Reviews

Grga Brolih
Grga Brolih
09:20 24 Apr 17
I was a bit hesitant at first because I had not really done any research, just my friend told me about Houston Tax Attorney. Anyway i decided to give them a try and I was really impressed and pleased with the outcome of my experience. They were always very pleasant and professional and made me feel free from my tax issues. Good job!
Brown Jones
Brown Jones
08:54 10 Jun 17
Houston Tax Attorney has given me my life back. I was unable to pay my payroll taxes and in combination with the penalties attached to those taxes, my debt had begun to snowball. Houston Tax Attorney genuinely cares about their clients; they helped me throughout the process. I am extremely grateful to them.
Sandra Camacho
Sandra Camacho
03:47 27 May 17
I had a tax problem and needed help, so I went to Houston Tax Attorney. Love the team, they were so organized and communicated. Good work was done!
Turman Villanueva
Turman Villanueva
12:20 21 Apr 17
Dealing with Houston Tax Attorney was simple from the beginning to the end. Every person I spoke to was knowledgeable and helpful. I was guided in all aspects of the process and given the best advice regarding my tax condition. I have been given a second chance with the IRS. Thank you.
Bill Moore
Bill Moore
07:05 02 Jun 17
I want to Thank Houston Tax Attorney team. They took care of my IRS issues with great professionalism. No more sleepless nights. Thank you Guys!
Sharon G. Velasco
Sharon G. Velasco
08:31 24 Jun 17
I had some big tax issues and I was unable to handle it alone. Houston Tax Attorney helped me to settle all my tax problems. They were there all the way. I respect their professionalism and appreciate their commitment to their clients.
See All Reviews