Tax Returns and Chapter 7

 

Why do I have to provide the trustee with my tax returns? Simple. Because the Bankruptcy Code says so. It also says I am supposed to have them at least seven (7) days prior to your Meeting of Creditors. Here is the Code provision from Section 521:

(2)(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.

(C) If a creditor requests a copy of such tax return or such transcript and if the debtor fails to provide a copy of such tax return or such transcript to such creditor at the time the debtor provides such tax return or such transcript to the trustee, then the court shall dismiss the case unless the debtor demonstrates that the failure to provide a copy of such tax return or such transcript is due to circumstances beyond the control of the debtor.

Several additional, and very important, points:

  • If you haven’t filed your returns, you will have to do so;

  • If you are exempt from filing, you will need to provide me an affidavit to that effect;

  • If you don’t have a copy of your return, you can order a transcript from the local IRS office;

  • REDACT OR BLACK OUT the following personal identifiers:

    —–Social security numbers to the last four digits;
    -Financial account numbers to the last four digits;
    -Names of minor children to the initials;
    -Dates of birth to the year.