Taxes and Bankruptcy

Many people wonder if they can discharge income taxes in bankruptcy and, if so, how

Contrary to popular belief, certain income tax debts are dischargeable through bankruptcy provided they meet specific requirements.

Filing bankruptcy in order to obtain relief from other debts can enable you to come back into compliance with the IRS and your state taxing authority. You may be able to avoid IRS collection actions such as wage garnishment, IRS and state tax liens, and IRS levies on your real and personal property. Filing bankruptcy with the guidance of our tax attorneys can discharge the taxes and may prevent criminal prosecution.

If you owe income, business, or other taxes, if your debts are mounting, and you are considering bankruptcy, it is imperative to be represented by a professional. 

The tax lawyers at McCauley Law Offices are prepared to assess all aspects of your financial situation and help you:

  • Decide whether filing Chapter 7 or Chapter 13 bankruptcy is the right step for you, given your existing financial liabilities and/or tax debt.
  • Determine how much, if any, of your tax liability may be dischargeable through bankruptcy.
  • Negotiate payment plans with creditors other than the IRS or state taxing authorities.
  • Assess whether non-bankruptcy alternatives for tax resolution, such as negotiation of an installment agreement, IRS penalty abatement, or an Offer in Compromise would provide a better resolution for your tax debt.

The IRS and state tax agencies are “priority creditors” in a bankruptcy case. Complex laws and conditions may enter into your ability to discharge tax debt, penalties, and interest through bankruptcy. 

To discuss your debt relief needs, including all your tax-related concerns with a dedicated lawyer focused on protecting your interests, call our firm today at 610-388-4474.

Take the first step towards resolving your tax debt and achieving financial stability. 


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A taxpayer sought relief from their overwhelming tax debts and approached a bankruptcy attorney for assistance. The attorney filed a Chapter 7 bankruptcy to discharge the tax liabilities, but unfortunately, the filing was premature, and significant IRS tax debt remained unresolved. As a result, the IRS initiated collection actions against the taxpayer, causing distress and uncertainty. Realizing the need for expert guidance, the taxpayer reached out to McCauley Law office. Our adept attorneys immediately negotiated a reasonable installment agreement with the IRS, offering much-needed respite to the taxpayer. Furthermore, we proactively consulted with a malpractice attorney to hold the bankruptcy attorney accountable for their missteps. It is crucial to work with attorneys who comprehend the intricate interplay between tax debts and bankruptcy, ensuring that you explore all suitable options. If you are facing tax-related financial challenges, we offer a free consultation to help you navigate the best course of action tailored to your circumstances.