You may be able to discharge income tax debt owed to the IRS or the State of California by filing for bankruptcy, under certain circumstances:
- The tax debt must be at least three years old.
- You must have filed a tax return for the unpaid debt at least two years before filing for bankruptcy.
- The back taxes must have been assessed more than 240 days before you filed for bankruptcy.
- There must have been no misconduct on your part involving the back taxes in question, such as tax evasion or filing a fraudulent tax return.
There are other important factors to consider when attempting to discharge tax debt in bankruptcy. For instance, even if your back taxes are discharged, if there is a tax lien on your assets (i.e. real estate or a retirement plan), the IRS or California taxing authority may still be able to enforce the lien later on.