Find the best financial services for you at: SMARTFINANCESOLUTIONS.NET - Can one file bankruptcy for personal debt and the irs for taxes? - Generally, federal income tax is not forgiven by bankruptcy. There are some rare cases in which a good bankruptcy attorney can get them dismissed, but those are usually cases where the filer is permanently disabled or in some other way it can be proven that they cannot earn an income in the future and payment of the tax owed is impossible. Those cases are few and far between.

You generally work out an agreement with the IRS to repay the back taxes before the court will approve the bankruptcy. The IRS may help you out by reducing the penalties and interest that accrued on your unpaid liability. -