Can IRS Debt Be Included in Chapter 13 Bankruptcy?

Can IRS Debt Be Included in Chapter 13? Key Facts to Know

Can IRS debt be included in Chapter 13 bankruptcy? In many cases, yes—but not all tax debts are treated equally. If you’re behind on taxes and overwhelmed by payments or collection threats, Chapter 13 may offer a legal path to financial stability. Understanding how IRS debt fits into this type of bankruptcy is the first step toward long-term relief.

Types of IRS Debt That May Be Included in Chapter 13

Before filing, it’s important to understand the kinds of tax debt that may or may not qualify.

Priority vs. Nonpriority Tax Debt

The IRS categorizes tax debt into two types: priority and nonpriority. Priority tax debt includes recent income taxes and must be paid in full through the Chapter 13 plan. Nonpriority tax debts are older and may be treated like credit card debt—potentially discharged if other conditions are met.

Criteria for Dischargeable Tax Debt

To be dischargeable, income tax debt must meet specific IRS guidelines:

• The tax return was due at least three years ago
• The return was filed at least two years ago
• The IRS assessed the debt at least 240 days before the bankruptcy
• No fraud or tax evasion was involved

If these rules are met, some IRS debt may be reduced or wiped out in Chapter 13.

How IRS Debt Is Treated in Chapter 13 Repayment Plans

Chapter 13 helps you repay IRS debt in a more structured, manageable way.

Repayment Over 3–5 Years

Under Chapter 13, you’ll propose a monthly payment plan lasting three to five years. The plan must repay all priority IRS tax debt in full over this period. Nonpriority debts may be partially paid, depending on your income and assets.

Full vs. Partial Payment of Tax Debts

Priority tax debts—typically from the past three tax years—must be paid in full. However, older nonpriority tax debts can sometimes be discharged with little or no repayment if your plan meets legal standards and the IRS agrees.

Learn more about how to structure a repayment strategy in our tax debt relief programs guide.

Chapter 13 Advantages for Taxpayers with IRS Debt

Filing Chapter 13 can offer relief that goes beyond just handling tax bills.

Stops IRS Collections

When you file, an automatic stay goes into effect. This immediately stops IRS wage garnishments, bank levies, and other collection actions while your case is pending.

Avoids Additional Penalties or Interest

During the life of your repayment plan, penalties and interest stop accruing on priority tax debt, giving you breathing room and preventing further financial damage.

Structured, Affordable Payments

The bankruptcy court approves a plan that fits your income and budget, helping you pay down debt at a pace you can afford while protecting your assets.

Limitations on Including IRS Debt in Chapter 13

Chapter 13 offers many benefits, but it’s not a catch-all solution for every tax problem.

Recent Tax Filings and Non-Dischargeable Debts

If you haven’t filed all required tax returns, you may not be eligible to proceed with Chapter 13. Also, debts related to fraudulent returns or payroll taxes cannot be discharged and must be fully paid.

Debts That Must Still Be Paid in Full

Any tax debt that doesn’t meet discharge criteria—such as taxes from the last few years or debt resulting from penalties—must be repaid in full under the plan.

See how to avoid tax penalties and minimize your liability in our penalty abatement guide.

Preparing for Chapter 13 With Tax Debt

Planning ahead is crucial when your IRS debt is involved in a bankruptcy case.

Review Tax Filing History

Make sure you’ve filed all required tax returns. The court and the IRS will require this before your Chapter 13 plan can be approved.

Work With a Bankruptcy Attorney or Tax Expert

Filing bankruptcy with IRS debt is complex. A legal or tax professional can help you correctly classify your debts, structure a plan, and ensure IRS compliance throughout the process.

If you’re unsure where to begin, get a free tax case review and speak to someone experienced in bankruptcy tax law.

Including IRS Debt in Chapter 13: What to Expect

So, can IRS debt be included in Chapter 13? Yes—especially if the debt qualifies based on age, filing history, and type. Chapter 13 can stop collections, reduce stress, and help you repay what you owe on terms you can manage. Just be sure to review your tax history and work with a qualified advisor to improve your outcome.

Explore Chapter 13 If You Have IRS Debt You Can’t Pay

If you’re wondering can IRS debt be included in Chapter 13, the answer could be your way out of a stressful financial situation. TaxDebtLawyer.net connects you with experienced tax professionals and bankruptcy partners who can help you determine if Chapter 13 is right for you—and guide you through every step of the process.

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