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Can IRS Debt Be Discharged in Chapter 13? Priority Taxes and Tax Liens
Partly. In Chapter 13, tax that qualifies as priority must be paid in full through your plan, and the discharge at the end eliminates tax debts paid in the plan plus tax debts older than three years, unless returns were filed late. A filed federal tax lien is the exception that catches people out, because it can survive the discharge. All State Tax Resolution (Sabih Shafi, EA, IRS Enrolled Agent) sorts your tax years into priority, older and lien-secured piles before you decide anything.
Want your own tax years sorted before you decide on a plan? Book a free 20-minute tax review.
Priority tax: paid in full, not wiped out
Under 11 U.S.C. 1322(a)(2), a Chapter 13 plan has to provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507, unless the holder of a particular claim agrees to different treatment. Tax is where this bites.
IRS Publication 908 explains that certain unsecured debts are given priority for payment purposes, and certain tax debts arising before the case was filed are classified as eighth priority claims. For income tax, the main tests are these:
The return was last due, including extensions, less than three years before the petition.
The IRS assessed the tax within 240 days before the petition, with extra time added for a pending offer in compromise or a stay in a prior case.
In Chapter 13 the debtor can pay such taxes over three years or over five years with court approval. The same tests drive the Chapter 7 analysis, which we walk through in the 3-year, 2-year and 240-day rules.
Penalties are treated separately. Publication 908 says a tax penalty that is punitive in nature, meaning not for actual monetary loss, is payable as a general unsecured claim.
Older tax: what the plan discharge reaches
Priority tax gets paid. Older tax that does not meet the priority tests is a different category. The IRS says a Chapter 13 discharge eliminates tax debts paid in the plan and tax debts older than three years unless returns were filed late.
Publication 908 describes it as a broad discharge: a debtor who completes all payments under the plan receives a discharge of all debts provided for by the plan, though priority tax claims must be paid in full under the plan. Under section 1328(a), the court grants that discharge after the debtor completes all payments, except for debts of the kinds listed there.
What a Chapter 13 discharge does not cover
Publication 908 lists these taxes as excepted from the broad Chapter 13 discharge:
Withholding taxes for which the debtor is liable in any capacity.
Taxes for which no return was filed.
Taxes for which a return was filed late, including under any extension, and within two years before the petition.
Taxes for which a fraudulent return was filed.
Taxes the debtor willfully attempted to evade or defeat.
Publication 908 also notes an exception for debts where the creditor, including the IRS, did not receive notice of the Chapter 13 case in time to file a claim.
Why a filed federal tax lien survives the discharge
A discharge and a lien are two separate things. Publication 908 says that if the IRS filed a Notice of Federal Tax Lien before the petition, the IRS will have a secured claim in the case to the extent the lien attached to equity in your assets. If a tax is discharged, it may still be collectible from your pre-bankruptcy property, because perfected liens generally pass through bankruptcy unaffected, even when your personal liability for the debt is discharged.
The IRS lien page puts it plainly: if you file for bankruptcy, your tax debt, lien and Notice of Federal Tax Lien may continue after the bankruptcy.
If the IRS did not file a notice before the petition, the lien is removed from your pre-bankruptcy property if you exempted that property out of the bankruptcy estate. But a lien that arises at assessment may remain if the property was excluded or abandoned from the estate, even without a filed notice.
The IRS says paying your tax debt in full is the way to get rid of a federal tax lien, and that lien withdrawal, subordination or discharge of property exist if specific conditions are met. Knowing whether a notice was filed, and when, belongs in your planning before the petition.
Rules to follow during the case
The IRS says that before a Chapter 13 you must file all required tax returns for tax periods ending within four years of the bankruptcy filing. During the case you must keep filing, or get an extension for, all required returns, and you should pay current taxes as they come due. Failing to do so may result in the case being dismissed. The IRS points to Publication 5082 for what to know about Chapter 13 and delinquent returns.
Other points from the IRS bankruptcy FAQ:
Payments in a Chapter 13 case are property of the estate and are made through the plan.
You can receive tax refunds in bankruptcy, but refunds may be delayed or used to pay down tax debts.
A spouse is not automatically subject to bankruptcy protection or discharge when the other spouse files.
Timing, hardship and dismissal
Plan length is capped by statute. Under section 1322(d), a debtor whose current monthly income times 12 is not less than the applicable state median may not have a plan longer than five years. Below the median, the plan runs no longer than three years unless the court approves a longer period for cause, and never beyond five. The IRS says discharge comes when the plan is completed, or when the court grants a hardship discharge.
A hardship discharge is possible where failure to complete the payments was due to circumstances for which the debtor should not be held accountable. All unsecured claims must still be paid not less than they would have received in a Chapter 7 liquidation, and debts excepted from an individual Chapter 7 discharge are excepted too.
If a case is dismissed, the picture changes. The IRS says a dismissal ends the bankruptcy protection and does not relieve debts, the IRS may keep payments, and time in bankruptcy extends the time to collect what remains. The IRS generally has 10 years from assessment to collect. That period is usually suspended from the day the bankruptcy is filed until the case is discharged, dismissed or closed, and the IRS adds another six months afterward by law.
Chapter 13 is one of several routes
The IRS itself says that if you owe past due federal taxes you cannot pay, bankruptcy may be an option, and other options include an IRS payment plan or an offer in compromise. Which fits depends on the tax years, the lien position and what else you owe. Our guide to options to weigh before filing compares them, and the hub on bankruptcy and IRS debt ties the pieces together.
Working with an Enrolled Agent
Enrolled agents are licensed by the IRS and must pass a three-part Special Enrollment Examination covering tax planning, return preparation and representation. With Form 2848 you can authorize an individual who is eligible to practice before the IRS to represent you.
We start on the IRS side from your first call, including the pre-bankruptcy resolution options. If a bankruptcy filing turns out to be the right route, we bring in our partner attorney for the filing itself, and you keep working with one team.
Frequently Asked Questions
Can IRS debt be discharged in Chapter 13?
Some of it. The IRS says a Chapter 13 discharge eliminates tax debts paid in the plan and tax debts older than three years unless returns were filed late. Priority taxes must be paid in full under the plan, and taxes with no return, a recently filed late return, fraud or evasion are excepted from the discharge.
What is a priority tax debt in Chapter 13?
Priority tax debt is tax entitled to priority under section 507, which includes eighth priority taxes. A plan has to provide for full payment of those claims in deferred cash payments. For income tax, the main tests are the return due date within the last three years and an assessment within 240 days before filing.
How long can I take to pay priority taxes in Chapter 13?
Publication 908 says the debtor can pay priority taxes over three years or over five years with court approval. The plan length itself depends on income against the state median: above it, a plan may not run longer than five years, and below it, no longer than three years unless the court approves more for cause.
Does a federal tax lien go away in Chapter 13?
Not automatically. If the IRS filed a Notice of Federal Tax Lien before the petition, perfected liens generally pass through bankruptcy unaffected, so the IRS may still collect a discharged tax from your pre-bankruptcy property. The IRS says paying the debt in full is the way to get rid of a lien.
What happens if my Chapter 13 case is dismissed?
A dismissal ends the bankruptcy protection and does not relieve debts. The IRS says it may keep payments, and time in bankruptcy extends the time it has to collect what remains. The collection period is usually suspended while the case is open and the IRS adds six months by law afterward, so a dismissed case can leave you with the debt and a longer clock.
Do I have to file back tax returns before a Chapter 13?
Yes, for recent periods. The IRS says you must file all required returns for tax periods ending within four years of the bankruptcy filing, then keep filing and paying current taxes during the case. Missing returns can also keep a year's tax out of the discharge, because a tax with no return is excepted.
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Last reviewed: October 2026 by Sabih Shafi, EA
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This article is general information, not individual tax advice. If you want to talk through your own IRS situation, book a free 20-minute review or call or text us directly.
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