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 definitive and complicated rules regarding discharging tax liabilities. In both instances, the following must be true:

• Tax returns were timely filed or it has been at least 2 years since the returns were filed
• Tax returns were last due to be filed for at least 3 years, including extensions
• Tax liability was assessed at least 240 days before filing bankruptcy
• Taxpayer did not pursue tax evasion or defeat
• Tax liability is not due to a fraudulent tax return
• Tax was not assessable at the time of filing bankruptcy
• Liability is not due on Trust Fund Tax
• Tax was unsecured

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