In some cases you may be able to discharge tax debts in a chapter 7 case. The tax return must have been last due more than 3 years before the bankruptcy case is filed, and the return must have been actually filed more than 2 years before the case is filed. Additionally, you must not be found to have willfully tried to evade the tax, or filed a fraudulent return.
Even in situations where you can't discharge your tax debts in Chapter 7, a bankruptcy can still be helpful in dealing with them. In a Chapter 13 case, you can pay non-dischargeable tax debts through a payment plan over 3-5 years. There are several benefits to doing this compared to working out a payment plan directly with the taxing authority. First, you have the protections granted by the automatic stay provisions of the Bankruptcy Code. This means that the IRS or Mass. Department of Revenue can't levy wages, intercept tax refunds or attach your bank account while you are in bankruptcy. Second, once you file bankruptcy, penalties (though not interest) stop accruing on the debt, making it much easier to pay it off in less time more less money. Third, in Chapter 13, you make only one payment to the trustee each month, and the money is then distributed to creditors according to the terms of the plan. Many people who owe the IRS, owe MDOR as well as other creditors, making individual payment plans very burdensome. Chapter 13 provides an easy mechanism to resolve many debts with one easy payment plan.