Can I File for Bankruptcy If I Haven’t Filed Taxes

Your returns must be current if you file for Chapter 13 bankruptcy, but not if you file a Chapter 7 case.

Whether you can file a bankruptcy case without current income tax returns will depend on if you're filing a Chapter 7 or Chapter 13 case and your particular situation.

Chapter 7 Bankruptcy: Providing Your Most Recent Return

Most people prefer to file for Chapter 7 bankruptcy when possible because it doesn’t involve paying into an extended payment plan for three to five years. Instead, all of your qualified debts get discharged after four to six months.

In this chapter, there’s no rule requiring you to have your tax return filings current when you file for bankruptcy. The requirement is that you turn over the last filed return. For instance, if the last time you completed your taxes was in 2004, you’ll turn over your 2004 tax return.

But, that doesn’t mean that if you aren’t current, you’ll get off the hook in every situation. Here’s why.

When filing bankruptcy, your primary responsibility is to provide complete and accurate financial information on official bankruptcy forms and to verify that information with supporting documents, such as paycheck stubs, bank statements, and tax returns.

The bankruptcy trustee is responsible for administering your case and will review tax returns because they contain information that isn't apparent from the income and expense information in your paperwork. For instance, the trustee will likely look for the following:

  • Does the return support the income claimed in your paperwork?
  • Does the return list any refunds you haven’t been paid?
  • Does the return show any business expenses or losses?

If your last return was for a tax year other than the most recent one, the trustee might ask why you failed to file. If you weren’t required to file a return because you didn’t work during the prior year, or you have another valid reason, the trustee might ask you to prepare a short statement to that effect.

However, if the trustee can’t verify the information listed above without your return, and the trustee believes that you’re failing to cooperate or that you’re hiding something, the trustee could ask the court to deny your discharge.

Chapter 13 Bankruptcy: Returns Must Be Current

People often choose to file for Chapter 13 bankruptcy when they make too much money to qualify for a Chapter 7 case. Others file this chapter when they’d like to catch up on a past due mortgage or car payments or pay off debt that won’t go away in bankruptcy, such as a support obligation or most tax debt.

In Chapter 13 bankruptcy, the debtor (the person who owes money to creditors) must pay into a three- to five-year repayment plan. Before the court approves the plan, the debtor must provide the trustee with tax returns for the four most recent tax years.

This rule isn’t designed to assist the trustee so much as accommodate the IRS. In Chapter 13 bankruptcy, the debtor must pay any priority tax in full over the course of the plan. For most debtors, that would be taxes owed for the three most recent tax years. To be sure that you’re paying all that you’re required to pay—and that the IRS is getting its due—you must file your tax returns.

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