Some tax debt dies in bankruptcy. Timing decides.

Bankruptcy is a serious step with lasting consequences — and for some taxpayers drowning in old income tax debt, it is also the correct one. The tragedy we see is the sequence done wrong: someone files bankruptcy first and discovers afterward that their tax debt didn't qualify. The dischargeability analysis must come first.

The timing tests (simplified)

1. The 3-year rule — the return was due at least three years before the bankruptcy filing.
2. The 2-year rule — the return was actually filed at least two years before.
3. The 240-day rule — the tax was assessed at least 240 days before.
4. No fraud or evasion — fraudulent returns and willful evasion never discharge.

What never discharges

• Trust-fund payroll taxes — personal liability survives every chapter (see Payroll Tax Problems).
• Recent income taxes — anything failing the timing tests above.
• Debt from unfiled years — in many jurisdictions, returns the IRS filed for you don't start the two-year clock. Filing your own returns first can change everything (see Non-Filed Returns).

Sometimes the right advice is "wait four months, then file — and the debt dies." That sentence has been worth six figures to clients. It only comes from doing the analysis first.

We map every tax year against every rule, coordinate with your bankruptcy attorney, and — when bankruptcy isn't the right tool — show you the alternative that is.