The Importance of Filing Tax Returns for Bankruptcies
With tax season coming up it’s likely that a number of individuals may be interested to know how they can go about filing tax returns after bankruptcy has taken place. For individuals that are hoping to avoid filing taxes after completing a bankruptcy, is important to consider the responsibility of the taxpayer to share the details of their bankruptcy.
Filing taxes are important to bankruptcy and the bankruptcy code requires people to disclose their debts as well as completed tax return to outline nondischargeable debts in bankruptcy.
Types of nondischargeable debts in bankruptcy:
Certain types of debts are not considered to be the same as credit card debt or dischargeable debts within bankruptcy. Whether you’re buying a home, paying off medical expenses or paying off other types of debts there are a series of debts which are dischargeable under the US bankruptcy code as well as some exceptions.
Certain types of debts like federally backed student loans are not something that can be discharged but it is something that you can add to a tax return as part of your ongoing debts. Only some tax debts are dischargeable, so it is important to speak with an experienced bankruptcy attorney in order to make that determination.
Filing tax returns can be important as this is a debt that cannot be forgiven in the same way that many of your debts can be in bankruptcy. While there are certain tax debts that can be wiped clean when you declare bankruptcy, if you don’t regularly file a tax return you could end up more money in addition to the current tax debt you have that cannot be cleared in a bankruptcy.
Ninth Circuit Court of Appeals determines nondischargeable debt:
A recent case from the Ninth Circuit Court of Appeals clearly defines some of the main aspects of taxes that can be discharged in a court of law. A man tried to discharged tax debts of around $70,000 in year 2001. The IRS filed a series of substitute returns for him and assess the ongoing penalties because he had not filed tax returns for over several years. After seven years of not filing or amending a return the man wanted to have this debt from his neglected tax returns discharged in a bankruptcy case.
The court did not directly accept the man’s late return and was not able to allow the debt to be discharged. If he was able to file and pay his tax return every year it could have been possible that the debt would not exist in the first place, or if he had filed the returns timely the debt would have been discharged in the bankruptcy.
If you are struggling to pay your current debts and you could use a hand managing ongoing tax returns/ bankruptcy you should consider speaking to a bankruptcy lawyer today. Our firm can help you with a qualified bankruptcy lawyer that’s willing to take your case. If you are behind on filing tax returns and you are struggling with a series of other debts, we guarantee that a bankruptcy lawyer will speak with you at no charge. Don’t let your debts continue to grow – let our firm help you today.