At TaxWorx, LLC in Fort Worth, we know that bankruptcy is often viewed as a last resort. But for some taxpayers, it can actually be a powerful tool to finally break free from overwhelming IRS tax debt.
Not all tax debts qualify for discharge in bankruptcy, but in the right circumstances, filing can eliminate or restructure what you owe. If you—or someone you know—are buried under tax debt and other financial obligations, understanding how bankruptcy interacts with IRS debt is critical. And just as important, working with an experienced tax resolution professional can make all the difference.
Can You Discharge Tax Debt in Bankruptcy?
The short answer: sometimes.
Certain IRS debts may be wiped out (discharged) through bankruptcy if they meet very specific criteria. Others may still need to be paid, but bankruptcy can often restructure repayment into a more manageable plan.
Which Tax Debts May Qualify for Discharge?
Income tax debts may qualify for discharge under Chapter 7 or Chapter 13 bankruptcy if all of the following are true:
-
The tax return was due at least 3 years ago
-
You filed the return at least 2 years ago
-
The IRS assessed the tax at least 240 days ago
-
The debt is related to income taxes (not payroll, restitution, or certain civil penalties)
-
You did not commit fraud or willful tax evasion
If these conditions are met, your income tax debt could be legally erased in bankruptcy.
Other Benefits of Bankruptcy When Dealing with the IRS
Even if your tax debt doesn’t qualify for discharge, bankruptcy can still provide meaningful protections, such as:
-
Automatic stay: Stops most IRS collection actions immediately, including levies, garnishments, and property seizures.
-
Structured repayment time: Chapter 13 can give you the chance to repay taxes in an organized plan.
-
Possible penalty & interest relief: Penalties and certain interest may be reduced or frozen.
-
A fresh start: Once the bankruptcy is complete, you can move forward without the constant fear of IRS enforcement.
How TaxWorx Can Help
Bankruptcy and IRS tax issues are two of the most complex areas of financial law—and when they overlap, you need a strategy built on experience. That’s exactly what we provide at TaxWorx, LLC.
Here’s what we do for our clients in Fort Worth and across Texas:
- Analyze your tax debt to determine if it qualifies for discharge
- Coordinate with your bankruptcy attorney to ensure your case is structured properly
- Represent you before the IRS to halt enforcement actions and negotiate terms
- Guide you through all available options—because bankruptcy is just one of many tools in a strong tax resolution strategy
Bankruptcy isn’t the right choice for everyone. But in the right situation, it can be a life-changing solution.
Let’s See if Bankruptcy Is the Right Tool for You
If you or someone you know is overwhelmed by tax debt and struggling with other bills, bankruptcy may offer a path forward—but it’s vital to get expert advice first.
Contact TaxWorx, LLC in Fort Worth today at (817) 241-4120 for a free consultation. We’ll review your situation, explain whether bankruptcy might help resolve your IRS tax problem, and help you chart the best path toward financial freedom.
