Unfiled Tax Returns In Bankruptcy

calendarsWhen no tax return has been filed,  the taxes for that year cannot be discharged in bankruptcy.

Likewise, if a return was filed late, after the due date and any extension, the tax isn’t dischargeable.

That’s always been the rule in Chapter 7 under the Bankruptcy Code.  It’s a change in Chapter 13, courtesy of the 2005 bankruptcy code amendments.

Previously, taxes for years for which no return was filed could be discharged in Chapter 13 if they met the 3 year rule and the 240 day rule.

Provide returns

Another difference in practice between Chapter 7 and Chapter 13 involves providing copies of tax returns to the bankruptcy trustee:  in Chapter 7, the debtor must give the trustee a copy of the most recently filed return.  In Chapter 13, the debtor has to send the return for the last concluded tax year.

Chapter 13 also requires that the debtor have filed returns for the past four years.  There’s a narrow window to get returns filed after the bankruptcy case is commenced, but it’s a short period.

Returns during 13

Failure to file returns during a Chapter 13 can lead to the dismissal of a case that is otherwise approved and performing.  More on post filing taxes.

Here’s the link to the IRS forms page for downloadable forms for prior tax years.

If you have lost your records for an unfiled year, the IRS will share with you the w-2 and 1099 information on your income that has been sent to them.

Read more

Taxes in bankruptcy

Bankruptcy is tax free

Chapter 13 as alternative to offer in compromise

More on why you shouldn’t get an extension to file taxes

Image courtesy of BonzoESC.

About the Author
Northern California bankruptcy lawyer Cathy is a 30+ year veteran of bankruptcy practice in the Silicon Valley. She is known for energetic representation of clients and her command of bankruptcy law.