DISCHARGE TAXES IN BANKRUPTCY
There is a common misconception that income taxes are not dischargeable in bankruptcy. Most of our clients are shocked when we tell them that they can actually discharge some federal, state, and local income taxes in Chapter 13 and Chapter 7 bankruptcy. The penalties and interest that have also accrued on these taxes are also dischargeable. Determining which back taxes are dischargeable can be a complex process. Nonetheless, it is possible to discharge significant income tax debt in bankruptcy, if your tax debt fits within certain rules.