The bankruptcy code is a federal law designed to give Americans a second chance when it comes to their financial lives. Once debts start to accumulate, they can quickly grow out of control and obliterate one’s future. This includes income taxes from back taxes that were never paid.

There are certain concepts that are repeated over and over to the point where they are simply assumed to be true. This is, for instance, the case with the old saying that you will get cramps if you go swimming within an hour of eating. This is simply not true. The same can be applied to the common belief that you cannot get rid of income tax debt owed to the IRS in bankruptcy. You certain can if certain conditions are met.

The bankruptcy code allows for income taxes to be discharged in certain circumstances. The key is to show you complied with the filing laws, but simply did not have the money to pay. Further, the tax due must have aged. If that sounds confusing, let’s look at the five requirements.

The first concerns the due date of when the taxes were originally due. Under the law, that period must be at least three years ago. The date is usually April 15th of the year in question, but sometimes can be October if you filed an extension, but then did not pay.

The second requirement is the filing requirement. You must have filed the tax return in question, even if you did not pay. Many people do not realize the IRS views the filing of the tax return and payment of taxes as two separate issues. If you never filed a tax return for the year in question, you can forget a bankruptcy solution.

The third requirement actually gives you a break on the filing of the tax return. One would think three years would have had to pass from the filing date much like the standard for the payment of taxes. Instead, only two years need have passed.

The fourth requirement is the tax return must not have been fraudulent. If you made $500,000, reported $50,000 and paid nothing, you are not going to get relief from a bankruptcy judge. Fraud is a huge issue in bankruptcy courts and treated very harshly by judges. Don’t make this mistake.

The final requirement has to do with a tax assessment. When you fail to pay taxes after filing your return, the IRS will start sending you notices. At some point, the agency will send you an assessment. 240 days must have passed since this estimate before the bankruptcy court will discharge the debt.

Can you get rid of past due income taxes in bankruptcy court? Yes, if you meet the above requirements.

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