Delay Your Bankruptcy Discharge By Making False Tax Return Statements

by Kevin Gipson, New Orleans Bankruptcy Attorney

July 27, 2008

Kansas City, Missouri Bankruptcy Law Attorney Rachel Lynn Foley her article on this site, Do Not Lie To The Bankruptcy Court, speaks about the potential criminal results of lying in a bankruptcy.

Delay of the discharge of your debts is a less, but also important, potential result.

One way to delay your discharge (and to cost you money) is falsify the information on your tax return.

One document that you must produce as part of your bankruptcy is your tax return. False information on that return can cause a delay of your discharge.

Two common false statements that I see involve married couples with children in bankruptcy.

One is where the married couple files two separate returns listing both spouses as single when they are not. When I have seen this done it was to get an Earned Income Credit (EIC) for a parent when one parent makes a small enough amount of income to qualify for EIC if filing without their spouse, but not when the incomes of the spouses are combined.

A variation of this is both spouses file as head of household.

Both of these acts are attempts to under report income either to get money not due to the debtor of to get a larger refund.

How can these misreporting of marital status cause a delay in your discharge?

Because it is likely that the Internal Revenue Service will review the inaccurate tax return and compare it to your bankruptcy petition and learn of the misreporting.

Your bankruptcy will be delayed while you amend your return. You can also expect to have to pay additional taxes, penalties and interest to the IRS for your under reporting.

Before filing take a look at your tax returns. If you are married and your return does not say Married Filing Jointly or Married Filing Separately get these issues corrected before filing if at all possible.

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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

Last modified: January 17, 2013