Congress passed big changes to the U.S. Bankruptcy Code in 2005, the amendments were known as the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)."
Well, the consumer credit industry was behind the changes, so surprise, the new law doesn't prevent abuse or protect consumers. Particularly in the area of income taxes, most notably for my clients with IRS problems, the new law did away with what was known as the "super-discharge" of IRS taxes in chapter 13. It used to be, that if someone was delinquent on filing their tax returns, we could file the bankruptcy, file all the delinquent tax returns, and the taxpayer could usually discharge or cancel the taxes that were more than 3 years old. But that changed in 2005.
The Bankruptcy Code was changed, so that now, taxes for which a tax return was not filed more than two years before filing bankruptcy, are not discharged. Even if you go through a chapter 13 plan, to the extent these "non-priority but non-dischargeable" taxes were not actually paid by the Chapter 13 trustee, they are not discharged, and can continue to pursue you after the chapter 13 is over.
And even if the taxes were paid in full, they can come after you for any unpaid interest and penalties that has accrued. Only now are we seeing people complete their chapter 13's, and get billed for this old tax. If this happens to you, and you're sure that you still owe the IRS for these taxes, your most common remedy is to go on an Installment Agreement (a payment plan) with the IRS, until the balance is paid. If it is a very high balance (over $25,000), you may want to consider an Offer in Compromise, or perhaps another bankruptcy.
Consult with an expert IRS Tax /Bankruptcy lawyer for advice before you decide to do anything. I have been working with people with IRS and bankruptcy problems since 1982. If you live in the Houston, Texas area, for more information about my practice, call my office at 713-772-8037 for an appointment.