Bankruptcy and Income Tax Debt
Many people do not realize that a bankruptcy can discharge (wipe out) certain tax debts. A bankruptcy generally will wipe out an income tax debt, when the following conditions have been met:
- The due date (usually April 15 of the following year) for the tax debt is over three years old
- The tax return for that particular tax debt has been filed over two years ago.
- The tax has been assessed by the IRS over 240 days ago. This is usually the time when the IRS receives the return and determines how much is owed