If you are filing under Chapter 7 of the Bankruptcy Code, then you are required to file your most recent federal return states Gurnee bankruptcy attorney. You do not have to file previous year’s taxes to qualify for Chapter 7 bankruptcy. Of course, any tax that is due within three years of filing will not be eliminated anyway under a Chapter 7 bankruptcy. The requirement, though, is that you do file your most recent federal tax return as a prerequisite to being able to file for bankruptcy.
Now, if you do not have the requirement to file for your taxes in terms of lower income or some type of exemption status, then my office will prepare a tax statement which basically says that you do not have to file taxes and we will submit that information to the Chapter 7 bankruptcy trustee. The Chapter 7 bankruptcy trustee wants to receive those most recent years’ federal taxes at least seven days prior your 341 meeting of creditors. The information on the tax return must corroborate the information on the Statement of Financial Affairs; otherwise, you can have a problem with the US trustee.
In terms of Chapter 13, you are required to file four years of federal income tax returns prior to filing. Thus, if you are filing a Chapter 13 bankruptcy case, you must go ahead and file your taxes if you haven’t done so. Again, the same discharge ability rules apply as in a Chapter 7 bankruptcy case. Chapter 13 bankruptcy filing will eliminate or could reduce taxes that are more than three years old and treat those as an unsecured or a non-priority debt and any tax within three years is going to be treated as a priority debt.
The same thing applies with a Chapter 13 trustee in terms of getting that trustee proof of your four years of federal tax returns prior to seven days before the 341 meeting of creditors. It’s always a good idea to file your taxes on time. It’s always a good idea to have a professional file your taxes if they are complicated and you must file them if you want to comply with the Bankruptcy Code.
If you do not file your most recent federal tax return in a Chapter 7 or your most recent four years of federal tax returns in a Chapter 13 bankruptcy case and you do not submit those documents to your trustee, then upon 46 days after filing your case, your case will be automatically dismissed by the court. So this is a stringent, strict rule that has to be followed. But in my experience, it has not been a problem.
When the law first came into play in 2005, I was convinced that people would have to run and go file taxes before they would be able to file. Much to my amazement, most people did actually file for federal income taxes and this did not cause a big problem. The federal tax requirement is just another prerequisite, in other words, to get a fresh start or to be able to consolidate under Chapter 13. In many cases, people will need to file taxes prior to filing, however, it has not been a burden on the system and people are able to get their taxes done without any significant hardship whatsoever.