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Do I Need to File My Tax Returns Before Filing for Bankruptcy?

Posted on Apr 17, 2014 in Bankruptcy, Bankruptcy and Taxation, Bankruptcy procedures, Chapter 13, Chapter 7

April 15th is the deadline to file 2013 tax returns with the IRS and your state taxing authority unless you’ve received an extension to file.  But you may notice we ask for several years of tax returns (if you were required to file) before we can file your bankruptcy. Why?

Well, let’s say you have regular income and want to do a Chapter 13 filing to make a payment plan for your debts over 3 years.  One of the requirements in the bankruptcy code says you have to file all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition?  Huh?

Basically you have to have filed your last 4 years of tax returns before filing the bankruptcy.  What happens if you don’t?  Well, your Chapter 13 trustee can hold open the meeting of creditors to file those returns.  If they aren’t filed, the case can be dismissed and your bankruptcy will tank.  That would be bad.

The code also says all debtors have to provide certain tax returns to the trustee before the meeting of creditors.  If you don’t do that, the trustee can’t do their job and conduct the meeting.  Your case could be dismissed and you won’t get the benefit of the hard work, fees, and other documents you’ve already invested in the case.

Not only that, but if you never file your tax returns, the debt you might owe from those past returns can’t be discharged.  Think about that – you might owe tax debt from 2007 or 2008 that could be discharged this year if the taxes were filed in a certain time frame.  By not filing, you’re denying yourself a chance to eliminate that debt!

Tax returns are important pieces of information that lets your attorneys do their job of asking questions and let the trustees do their job in administering cases.  Unless you have a good excuse for not filing (such as only having social security income or not having any job in the year that the returns would have been filed), you should always file those returns.  If you owe the money, we can talk about how you might be able to pay it back or eliminate it.  But until that’s done, you’re only hurting yourself by refusing to file.

If you have questions about discharging or repaying taxes in bankruptcy, reach out to us.  Lakelaw will help go over your paperwork with you to make the most of your bankruptcy debt elimination or repayment plan.   Call 847-249-9100 or 262-694-7300 in Wisconsin, or e-mail us , but most of all, get those taxes filed and copies to us!

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