IRS Tax Discharge Calculator

Owe the IRS back taxes? Some IRS income tax debt can be wiped out in bankruptcy, and whether yours qualifies comes down mostly to dates. This free calculator checks your dates against the federal timing rules and shows how your tax debt would be treated in both Chapter 7 and Chapter 13. No name, no email, just a few dates and yes/no questions.

How the 3-2-240 rule works

Bankruptcy lawyers call it the 3-2-240 rule. IRS income tax is dischargeable only when all three clocks have run and there was no fraud:

• 3 years since the return was due, including any extension you requested.
• 2 years since you actually filed the return.
• 240 days since the IRS assessed the tax.

If every clock has run, the tax is treated like your other unsecured debt: Chapter 7 can wipe it out, and in Chapter 13 it goes into the plan with the rest, with whatever the plan doesn’t pay discharged at the end.

If any clock has not run, the tax is a priority debt. Chapter 7 will not discharge it, and a Chapter 13 plan has to pay it in full. When timing is the only thing in the way, the calculator tells you the earliest date you could file and still discharge the tax.

Some things pause the clocks

A few events stop these clocks from running, and the calculator asks about each one:

• An offer in compromise pauses the 240-day clock while it was pending, plus 30 days.
• A prior bankruptcy pauses the 240-day and 3-year clocks while the case was open, plus 90 days.
• An IRS collection appeal (a CDP hearing) pauses the 240-day clock while it was pending.

What the calculator can’t decide

Some situations need a lawyer’s read, and the tool is honest about that:

• Late-filed returns. Courts disagree about whether a return filed after its due date can ever lead to a discharge. The tool flags these for attorney review instead of guessing.
• IRS substitute returns. If the IRS filed a return for you before you filed your own, that tax is generally not dischargeable. Also flagged for review.
• Fraud or willful evasion. Tax tied to a fraudulent return or a deliberate attempt to avoid paying is never discharged.
• Trust-fund and employment taxes. Payroll taxes withheld from employees are never discharged. A Chapter 13 plan pays them in full.
• State and property taxes. The calculator covers federal IRS tax only. Different rules apply to state tax, and we can walk you through them.

Frequently asked questions

Is this legal advice?

No. The result is an estimate based on the dates you enter. Whether a specific tax debt can be discharged depends on details a calculator can’t see, which is why every result comes with an offer to talk it through for free.

Do I have to enter my name or email?

No. The tool asks only for the tax type, the relevant dates, and a couple of yes/no questions. The result shows right on the page.

What if my tax debt isn’t dischargeable yet?

Timing problems fix themselves. If the only issue is a clock that hasn’t run, the calculator shows the earliest filing date, and waiting to file may turn a tax you’d have to pay in full into one that gets discharged. That timing call is exactly what a consultation is for.

What happens to tax debt in Chapter 13?

Both outcomes run through the plan. Priority tax gets paid in full over three to five years, with collection stopped while you pay. Dischargeable tax gets lumped in with the rest of your unsecured debt, and whatever the plan doesn’t pay is wiped out at the end.

Does bankruptcy stop the IRS from collecting?

Filing triggers the automatic stay, which stops IRS collection like it stops other creditors. What happens to the debt itself afterward depends on the classification this calculator estimates.

Talk it through, free

The calculator gives you a starting point. Attorney Mike Assad gives you the real answer, in a free phone or Zoom consultation, for tax debt anywhere in Pennsylvania or New Jersey. Schedule your free consultation.