Bankruptcy Doesn't Discharge Tax Debt- Get the Scoop

I receive tons of e-mails throughout the day from people in desperate need of Tax Help. I never mind answering questions, feel free to drop me a line if you have specific questions. But I never usually share them along with my answers with the readers. But now, I'm sharing the answer to one pressing questions about Bankruptcy:

I filed for chapter 7 on 1/31/09 and obtained a discharge on 5/19/2009. At the time of my filing for chapter 7, I had IRS debts for the following tax periods;

Years 2000, and 2004 both filed on 12/5/2005
and year 2005 filed on 10/30/2006

I thought that I could wipe out the 2000 and 2004 tax liabilities since it's been more than 3 years from the time they were due, but when I spoke to the IRS today I was told the debts are not dischargeble. Is there something here that I'm missing? The person that I spoke to had a typical IRS response? what can I do? Is it better to write to them and if so to whom?


My Reply:
There are a couple of factors that could rule you out of having your tax debt discharged.

1. You had to have personally filed the return, if a Substitute for Return or SFR was filed, that tax year will not qualify

2. The Tax Return has to have been filed and accessed more than 24 months to filing for bankruptcy. This means the returns were filed AND processed and you were billed for tax debt 24 months before applying for bankruptcy.

Most taxpayers can’t clear those hurtles to have their tax debt discharged, and unfortunately it seems a lot of bankruptcy attorneys will erroneously claim tax debt can universally be removed. And about the “typical IRS response,” if the person you spoke with had the, “Yeah right, you owe it” attitude, that’s the culture of the organization. Typically, the Taxpayer does owe the IRS, and this makes them particularly difficult to communicate with.