Tax question and filing

[pilkerton21]

What happens if I file Chapter 7 before I file my taxes?

[LadyInTheRed]

What happens if I file Chapter 7 before I file my taxes?

You'll need to file your taxes before your 341. Otherwise, the 341 will be delayed until you do.

[Drazil65]

Hi, I have a question on this, why do you need to file your taxes before the 341? Reason I asked is that we had our 341 on 1/17 (filed chp 7 12/13) and we have not filed our taxes. The trustee never said a word about the taxes and we do have exemptions to cover it as well. Did not mean to take the thread over only wondering about the answer, thank you!

[LadyInTheRed]

Hi, I have a question on this, why do you need to file your taxes before the 341? Reason I asked is that we had our 341 on 1/17 (filed chp 7 12/13) and we have not filed our taxes. The trustee never said a word about the taxes and we do have exemptions to cover it as well. Did not mean to take the thread over only wondering about the answer, thank you!

You definitely should post if you have an experience that contridicts an answer. You caused me to find backup for my statement, which is a good thing, especially since I found out that the consequences could be harsher than a delay in the 341. People have reported having their 341s continued because the trustee wanted a copy of their previous year's tax returns even though the returns were not yet due. But, the law actually provides that the court shall dismiss the case if you fail to submit a copy of your return 7 days prior to the 341. Trustees probably prefer to give a debtor a chance to file the return than to petition to have a case dismissed.

Since you filed in 2011, the return you must provide is your 2010 return. People who file in 2012 must provide a copy of their 2011 return.

Bankruptcy Code Section 521(e)(2)(A) and (B) provide:

(A) The debtor shall provide--

(i) not later than 7 days before the date first set for the first meeting of creditors, to the trustee a copy of the Federal income tax return required under applicable law (or at the election of the debtor, a transcript of such return) for the most recent tax year ending immediately before the commencement of the case and for which a Federal income tax return was filed; and

(ii) at the same time the debtor complies with clause (i), a copy of such return (or if elected under clause (i), such transcript) to any creditor that timely requests such copy.

(B) If the debtor fails to comply with clause (i) or (ii) of subparagraph (A), the court shall dismiss the case unless the debtor demonstrates that the failure to so comply is due to circumstances beyond the control of the debtor.

[btbeme]

Since you filed in 2011, the return you must provide is your 2010 return. People who file in 2012 must provide a copy of their 2011 return.

I'd add to this - the later you file in the year, the more likely the Trustee will ask for a copy of your next return. I.E., if you file in December 2011, the Trustee will absolutely want your 2010 return and will likely want a copy of your 2011 return once it is filed.

This depends on a number of factors such as withholding on your paychecks and any other additional income you expect or changes since your filing (recall that question during your 341?). Using the above example, if your 2011 pay stubs tell the same tale that your 2010 taxes tell, you may not get the extra scrutiny. But, the Trustee does have the ability to retrieve your 2011 return transcript, and can reopen your case should they see something of great interest. Generally, I would expect the Trustee to give you that warning if they thought that they might be interested. If you were not advised by your Trustee or attorney, that would likely indicate the Trustee isn't too interested...but, it could still be requested.

[daylate]

(A) The debtor shall provide--

(i) not later than 7 days before the date first set for the first meeting of creditors, to the trustee a copy of the Federal income tax return required under applicable law (or at the election of the debtor, a transcript of such return) for the most recent tax year ending immediately before the commencement of the case and for which a Federal income tax return was filed; and

(ii) at the same time the debtor complies with clause (i), a copy of such return (or if elected under clause (i), such transcript) to any creditor that timely requests such copy.

(B) If the debtor fails to comply with clause (i) or (ii) of subparagraph (A), the court shall dismiss the case unless the debtor demonstrates that the failure to so comply is due to circumstances beyond the control of the debtor.

I'm not a lawyer but the way that reads to me is if you file BK before you file your 2011 return I think all the law says is you have to submit 2010's return (assuming you flied).

It says the most recent year for which you have filed not the most recent year.

Now having said that, I don't know if you can prevent the trustee from asking about 2011 or withholding a no asset ruling until he sees it.

[prindia]

(A) The debtor shall provide--

(i) not later than 7 days before the date first set for the first meeting of creditors, to the trustee a copy of the Federal income tax return required under applicable law (or at the election of the debtor, a transcript of such return) for the most recent tax year ending immediately before the commencement of the case and for which a Federal income tax return was filed; and

(ii) at the same time the debtor complies with clause (i), a copy of such return (or if elected under clause (i), such transcript) to any creditor that timely requests such copy.

(B) If the debtor fails to comply with clause (i) or (ii) of subparagraph (A), the court shall dismiss the case unless the debtor demonstrates that the failure to so comply is due to circumstances beyond the control of the debtor.

I'm not a lawyer but the way that reads to me is if you file BK before you file your 2011 return I think all the law says is you have to submit 2010's return (assuming you flied).

It says the most recent year for which you have filed not the most recent year.

Now having said that, I don't know if you can prevent the trustee from asking about 2011 or withholding a no asset ruling until he sees it.

In our case we were never asked about our 2011 taxes just 2010 and our case was declared a no asset case...but now we found out that we will be getting back over 7k so we made an appointment to meet with our attorney to see what will happen...

[gmk]

My attorney pretty much agreed with daylate's assessment when I told him that I had intended to file an extension, therefore my most recent return that was filed was for the year before. I had also done a rough out of my pending return and it showed that I had to pay additional taxes plus when you do an extension you're supposed to indicate what your owed taxes may be. I never got the chance to test this however as I went ahead and filed the return just before we filed for BK.

All of this being said, I'd hate to see someone get dismissed just because of a disagreement of what the legal jargon is on this. Best bet, take the argument off the table.

[LadyInTheRed]

I agree with daylate's interpretation of the law too. However, members of this board have had their 341s continued to allow them to file their returns that were not yet due because it was before April 15 or because they were on extension. If it were me, I'd rather get the return filed than take the risk. Better yet, I'd ask my attorney what will happen if I don't file my return before I file BK.

[prindia]

Well, I just came back from my attorney's office.. I am more confused now then ever . He told us that they can protect 5k of the refund which is great! My other question was when do they want me to give them this money..he said to wait and the trustee will let us know... he also said that the trustee may not ask for taxes and close the case, I guess we will see. He also gave us a paper from Capital one asking where the car is and how to contact us.. I thought we had until after the discharge but he said they can come pick it up 30days after our 341...now we need to find plan B of how we will get to work since the engine of our other car just blew and needs brakes..