Legal Question in Bankruptcy in Virginia

Bankruptcy-Chapter 7 and IRS Debt

Does a chapter 7 discharge settle my debt to the IRS?

I owe $5500 to the IRS from a 2005 return. I did an Offer in Compromise for this debt to find out that they will take my tax return for the next 5 years until it is paid in full. What is the point in settling a debt if they are going to take the money anyway? I need my return to keep afloat. So if I file Chapter 7 now and include this debt which many lawyers told me that I can - then after the Chapter 7 is discharged I can file my return and get my refund right? If I am going to file might as well do it now and and get an extension to the April 15th deadline. Let me know.


Asked on 3/03/09, 4:35 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Bankruptcy-Chapter 7 and IRS Debt

A 2005 income tax would be dischargeable in a bankruptcy filed on or after April 18 2009 (i.e., 3 years from the due date), PROVIDED you filed the return on time, or no later than 4/17/07 (i.e., it has been filed at least 2 years); and PROVIDED that at least 240 days passed between assessment and the filing of any offer in compromise. My guess is that your offer in compromise will have resulted in a delay in when you can file bankruptcy in order to discharge the taxes. It is necessary to get a complete transcript of your taxes from the IRS in order to make sure enough time has elapsed in all 3 categories in order to be sure they are dischargeable.

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Answered on 3/03/09, 5:12 pm


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