The most expensive myth in tax is that bankruptcy never touches tax debt. The truth: income taxes are discharged in bankruptcy courts every day, under timing rules that are mechanical, computable, and worth one plain-language lesson.
The Three Clocks
Income tax generally discharges when, at the bankruptcy filing date, all three are true: the return was due more than three years ago, counting extensions; the return was actually filed more than two years ago; and the assessment is more than 240 days old. The clocks pause for tolling events - prior bankruptcies freeze them for the case plus a tail, pending offers in compromise toll the 240-day clock - so the computation runs on transcript dates plus law. Its most common honest output is a date: dischargeable next spring. Waiting for a computed date is a legitimate strategy when the date kills the debt.
The Traps
Three matter most. The substitute-for-return lockout: in several federal circuits, a return filed after the IRS already assessed the year via SFR may never count for discharge - permanently barring those years from bankruptcy, which makes filing before the IRS does a discharge issue, not just a balance issue. The lien survival rule: discharge erases personal liability, but a lien recorded before filing survives against property owned at the petition. And the survivors: trust fund payroll taxes, the trust fund recovery penalty, and fraud liabilities pass through every chapter untouched.
Where Bankruptcy Fits
The discharge analysis runs alongside the other exits, not instead of them: sometimes a Chapter 7 in four months erases what an offer would settle over a year at greater cost; sometimes the statute expiration or a partial-pay agreement beats the courthouse entirely; and Chapter 13 can structure even non-dischargeable debts on terms better than the IRS's. Florida adds its own layer through the exemption scheme covered elsewhere in this library. The comparison is concrete, runs on one set of transcripts, and pairs tax counsel with bankruptcy counsel when filing makes sense. Get me the transcripts and you will have the dates within the week.