There are six major rules to determine dischargeability. The tax must pass all of these rules.
1) Have three years passed since the tax return was due? [the three year rule];
2) Have two years passed since the tax return was filed? [the two year rule];
3) Have 240 days passed since the taxes were assessed? [the 240 day rule, usually relevant with amended returns. Use Form 4506-T and request both the return and
the "account transcript" to obtain the record of assessment. The 240 day period is stayed during the period of an offer in compromise plus 30 days.];
4) Was the tax return fraudulent? [the fraudulent return rule];
5) Was there a willful attempt to evade or defeat the tax? [the willful evasion rule];
6) Does the tax arise from a duty to withhold? [Withholding taxes can never be discharged].
Authorities: Bankruptcy Code Sec. 523(a)(1) and Internal Revenue Manual Sec.
Tolling Rules: The 240 day period is stayed during the period of an offer in compromise plus 30 days. Note the difference between this and the rule pertaining to the stay of the
three year period. All time periods are also extended by a prior bankruptcy stay, a nonbankruptcy stay or an appeal of any collection action. The code then adds an additional 90 days.