Taxes can't be eliminated in bankruptcy. Wrong! Many taxes are eliminated in bankruptcy. However, there are several complex rules that apply. Eliminating taxes depends on how old the taxes are, when the returns were filed and whether the taxes have been assessed and the type of taxes. Both federal and state income taxes can be eliminated in bankruptcy. In cases where taxes cannot be eliminated it is possible to force a payment plan on the IRS and stop interest and penalties. Any questions should be directed to an attorney.