Form 1040 tax debts can be discharged in bankruptcy, that is, only if the tax returns were filed prior to the bankruptcy filing and prior to an IRS assessment. Even if the Form 1040 is filed late, the “tax return” requirement is deemed to be satisfied for the bankruptcy discharge. Please note, any tax assessment prior to filing the late tax return cannot be discharged in bankruptcy. Bankruptcy attorneys, who should be experts in this area of taxation (or at least well versed), do make this mistake.
Lesson: File all returns prior to your bankruptcy filing and prior to assessment, even if late. Some or all of your Form 1040 tax debt will then has a chance to be washed away with your bankruptcy filing.
Bankruptcy is a complex issue. Therefore, this is not intended to be specific legal or tax advice. Seek an expert for guidance.
Source Document: CC-2010-016