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IRS Tax Collection and Liens

If you are having difficulty with income tax debt, a Chapter 7 or Chapter 13 can help. Income taxes which are at least three taxable years old can generally be discharged in bankruptcy. Filing bankruptcy gives you immediately relief against collection efforts by either the IRS or State of Arkansas. Here is how the two different chapters of bankruptcy generally help with tax debt.

Chapter 7 and Tax Collection

Chapter 7 is straight bankruptcy. If income taxes are less than three years old, they cannot be discharged in a Chapter 7. If income taxes are at least three taxable years old, they are subject to discharge. You calculate the three years based on the taxable year that comes due each April 15. If the taxes are more than three years old but were not filed on time, they must have been filed for at least two years and have been assessed for more than 240 days to be dischargeable. Only income taxes are subject to a possible discharge in bankruptcy. Taxes owed that are considered trust fund taxes are not subject to discharge. Examples of these would be payroll taxes or sales tax owed by your business.

What About Taxes Less Than 3 Years Old?

Taxes less than three years old generally have to be paid back. However, this is where Chapter 13 can be a big advantage. Chapter 13 is a repayment plan so taxes that are less than three years old can be paid under a Chapter 13 plan. This plan allows you to pay the taxes over a period up to five years and to pay the taxes without any additional interest or penalties. If you have tax debt, you probably already know that interest and penalties add up quickly. Having five years to pay the tax debt off without interest or penalties can save a considerable amount of money.


If you have tax debt which includes taxes that are both more than three years old and less than three years old, you may want to look at filing a Chapter 13 in order to discharge out the old taxes and pay back the new taxes under friendlier terms that exclude any new interest or penalties.

Chapter 13 and Tax Collection

Chapter 13 is a reorganizational type of bankruptcy that attempts to repay creditors only in an amount your income and expenses show you can afford. Taxes that are subject to discharge in Chapter 7 (see discussion above) are treated as general unsecured debts in a Chapter 13 and only have to be paid back to the extent your income and expensive show you have disposable income to do so (if at all). Depending on your income and expenses, you may get the same benefit of discharging out older taxes in a Chapter 13 as you do in a Chapter 7.

Filing Bankruptcy Takes Back Control
from the IRS or State

When tax debts go unpaid, legal actions by the IRS or State almost always occur. By filing a bankruptcy action, you file a legal action that puts the law on your side and allows you to regain control. It is an effective way to keep the IRS or State from harsh collection efforts and allows you to manage your own finances in an orderly and predictable manner.

Stop IRS or State Tax Collection Immediately

The good news for those who are dealing with tax collection is that either Chapter 7 or Chapter 13 bankruptcy can be used to immediately stop the IRS. Either form of bankruptcy will allow you to stop IRS tax collection and improve your overall financial situation at the same time. Bankruptcy attorney Gregory Harris has helped Arkansans stop IRS tax collection for over 25 years. Contact us at the Harris Law Firm — Call 501-372-6985 or set an appointment online.  

Let us help you get a fresh new start.


Our Pledge To You

• We will consult with you without charge. There is no fee unless you decide to file.

We will make the process affordable for you. Our Fees and Costs »

We will do all the paperwork. No stacks of confusing forms.

Your case will be handled by an attorney, not a legal assistant.

We will be with you every step of the way to make sure you get a fresh start.


The Harris Law Firm has over 30 years experience in helping Arkansans file both Chapter 7 and Chapter 13. Give yourself a fresh new start — call us at 501-372-6985 or set an appointment online. We offer free consultations. There is never a fee unless you decide to file.

We represent clients in most of Arkansas including Pulaski County, Jefferson County, Faulkner County, Garland County, Lonoke County, Hot Springs County, Saline County, Little Rock, North Little Rock, Hot Springs, Malvern, Benton, Bryant, Cabot, Conway, Pine Bluff, Searcy, Sherwood, Jacksonville, Russellville and Lonoke. See Arkansas Counties We Practice In for a full list. We are a debt relief agency. We help Arkansans file for bankruptcy relief under the Bankruptcy Code. No information on this website or contact through this website should be interpreted as giving legal advise or creating an attorney-client relationship. Please read our Terms and Conditions page.

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