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Offer in Compromise - Bankruptcy

An alternative to Offer In Compromise for some taxpayers is filing bankruptcy. The Bankruptcy Code allows for the elimination of tax debt provided that certain qualifications have been met. The standards are the same regardless of whether you file a Chapter 7 or Chapter 13 bankruptcy, and they are as follows:

  1. The tax owed must be from a return that was due at least three years prior to the current tax year

  2. The tax return must have been filed two years prior to the bankruptcy

  3. The tax must have been assessed for at least 240 days prior to filing

  4. The tax return in question cannot have been filed fraudulently

  5. The taxpayer must not have been determined guilty of a willful attempt to evade the tax owed

  6. Any taxes that do not fall into all of the aforementioned categories are considered priority claims in bankruptcy