IRS Tax Discharge

In some instances, tax liabilities can be discharged by filing bankruptcy. There are two main types of bankruptcy available (Chapter 7 and Chapter 13), each with specific and complex rules regarding the discharge of tax liabilities. In both cases, the following conditions must generally be met:

• Tax returns were timely filed, or it has been at least two years since the returns were filed.
• Tax returns were last due to be filed at least three years ago, including extensions.
• The tax liability was assessed at least 240 days before filing bankruptcy.
• The taxpayer did not pursue tax evasion.
• The tax liability is not the result of a fraudulent tax return.
• The tax was not assessable at the time of filing bankruptcy.
• The liability is not due to Trust Fund Taxes.
• The tax debt was unsecured.

IRS Tax Expiration

The IRS has a legal period of ten years to collect a tax debt. This time period begins on the date the tax is assessed and the required statutory notice letter is sent.

If the collection statute expiration date passes, there is a possibility that your tax debt may become unenforceable. However, the IRS statute of limitations can be extended in many situations. You should always verify your status and never assume that your debt has expired due to the ten-year statute of limitations.

If you have questions regarding your tax liability, give us a call. Our team of experienced and trusted tax advisors will help you determine the best possible outcome.