Taxes and Bankruptcy

Even if you don’t think that you owe any back taxes, making sure that you have your taxes on file is important for the successful confirmation of your Chapter 13 bankruptcy plan. This is to prove to the IRS and your state tax collectors how much, if any, tax debt needs to be added to your Chapter 13 plan.

Proof of Claims for Taxes

When you decide to file for bankruptcy, your creditors, including the tax authorities, can file something called a Proof of Claim. So what is a Proof of Claim? A Proof of Claim essentially tells the Trustee how much debt the creditor believes you owe them. The tax authorities will file a Proof of Claim in your bankruptcy case if you owe any back tax debt, and/or if there are years in which they do not have a return on file for you. The missing tax years will show an estimated amount they believe you owe. A lot of times this amount is greater than what you actually owe for that year.

Why We Need Your Signed Taxes

In short, the IRS and State governments require you to file a tax return each year you have income.

In order to show what you actually owe, you will have to file the missing tax returns, and provide your attorney with the signed copies of the tax returns to send to the tax authorities and your
Trustee. Once the signed returns are received and processed, the tax authorities will file an amended Proof of Claim show the accurate amount owed.

It is important to note, the tax authorities can request the dismissal of your case if you fail to file or ask for an extension within the proper tax time frame. If you still don’t provide those documents in the 90 days following that request, the tax authorities can then force the dismissal of your case.

Got Questions?

Navigating Bankruptcy can be difficult, but you don’t have to do it alone! Call the Bankruptcy Law Offices of Dax J. Miller today to set up a free phone consultation. With our help, knowing what you need for your bankruptcy to be a success will be no problem.