This also stops interest and penalties. This means filing one Chapter 13 and completing it, and then filing a second Chapter 13 for remaining debts. If timed right, this can be accomplished before the IRS starts up collection again. While revived penalties can be paid at a discount in a subsequent Chapter 13, the old interest charges remain. Generally, the rules are the same for state income taxes as they are for federal ones.
Some states send out preliminary notices of state tax deficiencies.
In California, for example, the final date of assessment is 60 days or more after the proposed additional assessment. California and other states require filing an Amended Return after an IRS audit assessment. Most state sales taxes are not dischargeable in Chapter 7. In Chapter 13, they are treated as priority taxes to be paid in full. However, due to a quirk in California law, sales tax is imposed on the merchant, not the customer.