Unfiled Tax Returns in Chapter 13

25 Jul Unfiled Tax Returns in Chapter 13

Tax returns can be a trap for the unwary in Chapter 13 bankruptcy. Often, bankruptcy debtors do not have their tax returns squared away and filed before filing for bankruptcy. When non-tax creditors are pursuing you, and you need quick relief, often tax returns are the last thing on your mind. However, the need to file recent tax returns is enshrined in the updates to the bankruptcy code that went into effect in 2005.

Section 1308 of the Bankruptcy Code provides:

(a) Not later than the day before the date on which the meeting of the creditors is first scheduled to be held under section 341(a), if the debtor was required to file a tax return under applicable nonbankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.

This means that you must file all of your state and federal tax returns due within the past four years before your meeting of creditors. If you can’t do this, however, the law provides some help. At her discretion, the bankruptcy trustee can hold open the meeting for a period not exceed 120 days. It is the job of your lawyer to request this if your tax returns are not filed as of the date of your meeting. If the returns are not filed, and the meeting is not held open, your case will be dismissed if someone asks the Court to dismiss it. The reason for this is Section 1307(e) of the Bankruptcy Code, which provides:

Upon the failure of the debtor to file a tax return under section 1308, on request of a party in interest or the United States trustee and after notice and a hearing, the court shall dismiss a case or convert a case under this chapter to a case under chapter 7 of this title, whichever is in the best interest of the creditors and the estate.

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Nicholas Ortiz, Boston Bankruptcy Attorney

From Attorney Ortiz: We have been helping consumers and small businesses in Massachusetts successfully navigate through the bankruptcy process since 2002. We offer free initial consultations and payment plans. Call us at 617-716-0282 to discuss your debt relief options. Mention the Bankruptcy Law Network when you call!
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