I owe the IRS. Can taxes be discharged in Chapter 7 bankruptcy?
Whether your IRS debt will be discharged in a Chapter 7 bankruptcy depends upon when that tax debt was incurred. Taxes come due the following April after the year that they were incurred. For example, a 2014 tax debt comes due in April 2015.
If the tax came due in the last three years, then the tax becomes priority debt and is not dischargeable by the bankruptcy.
Please note that if you obtained an extension or if you did not file your taxes timely, then this three-year rule may not apply. In addition, if the government does an audit and assesses taxes within 240 days of you filing for bankruptcy, this will mean it is nondischargeable as well. You also cannot discharge a federal tax lien or a tax debt that was incurred through fraud or willful tax evasion.