It is very possible through an IRS offer in compromise but not as easy as the advertisements that tell taxpayers that their tax resolution company can settle IRS debt for pennies on the dollar. Offer in Compromise IRS Houston

Requirements for discharging tax debt in Chapter 7 Bankruptcy:  The taxes are income based.  The return was due at least three years ago.  You filed the return at least two years before filing for bankruptcy.  The taxes were assessed at least 240 days ago.  There is no fraud or willful evasion.

Even if you meet the above, the tax debt is not dischargeable if:  The IRS has filed a tax lien.  The tax is a “trust fund” tax such as FICA, Medicare, and other mandatory withholdings.  Non-Punitive tax penalties and erroneous refunds.

If paying your existing tax debts will cause significant financial difficulty, the IRS offers an Offer in Compromise (OICs). The IRS wants to get the most it can in a reasonable amount of time, and if that means negotiating the debt they will.

You must not be in an open bankruptcy proceeding You must have filed all required federal tax returns You must make all estimated tax payments If you are self-employed, you must have submitted all required federal tax deposits

There is some doubt as to whether the IRS can collect the tax bill from you — now or in the foreseeable future. The IRS calls this “doubt as to collectability.” due to exceptional circumstances, payment of your full tax bill would cause an “economic hardship” or would be “unfair” or “inequitable.” There is some doubt as to whether you actually owe all or some of the debt. The IRS calls this “doubt as to liability.”

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