Hi there, this is Jonathan Ginsberg. I’d like
to talk to you today about tax returns and bankruptcy. As you may know
when you file bankruptcy one of the things that your lawyer will ask you for
is copies of your most recently filed tax returns and also ask you
about any years that you have un-filed tax returns. The reason I do this
is that under the current law we’re required to submit copies of tax returns
to the trustee prior to your meeting of Chapter Seven or Chapter 13 341
hearing and the trustee needs these tax returns to verify the income that
you state on your financial affairs and to see whether or not there are
other sources of income that may be or not disclosed and to verify that
in fact you don’t have any disposable income. And in Chapter Seven cases, if you don’t supply
the tax return that could hold up your discharge. I’ve seen it, we won’t
get a discharge if you don’t supply the tax return even though the taxes
for un-filed returns are non- dischargeable you still have to provide the
tax returns to prove what you earned. Now in Chapter 13 the trustee is going
to demand tax returns because they need to see if you have any tax
reliability. Chapter 13 payment plan is going to allow us up to five
years and if you have unknown tax liability is no way to determine whether
your plan is feasible. So, for example if you have a plan that calls for
$800 a month but we don’t know whether your tax liability is $5000 or $500
there’s no way to know that $800 a month is efficient. So the trustee will not confirm a case, we’ll
object your case if there are no tax returns filed. And I’ll also tell you
that when it comes to getting tax returns filed you can get tax returns
done for previous years but it takes time because the tax preparers are going
to have to obtain copies of W2’s and 1099 and some of that stuff they
can get from the IRS but it takes a little bit of time. For example I recently
had a case where I had a client of mine who had several years of un-filed
tax returns and he swears to me that there is no liability. The problem
is this case is filed in late February and March before April 15, tax preparers
are really, really busy. So he has not been able to get a tax return
preparer to take the time to prepare his tax returns so we’ve had to reset
the confirmation over and over and over. This keeps adding time to the process as long
as stress to everybody, frustration from syllables tax returns are
submitted his case isn’t going to be available for a confirmation. So, I
would tell you that if bankruptcy is a possibility go and get those tax returns
filed. Some people say to me well I’m not waking up a sleeping dog, the
IRS is not bugging me but if I filed these tax return late now it’s going
to cause all of this collection activity. Let me tell you, the IRS is going
to find used regardless and they’re getting better and better. Everything
is computerized now so and I think with the government running out of money
they’re going to really look hard to find people who have not filed tax
returns so I would tell you that it’s better to address an un-filed tax return
problems sooner rather than later. It’s not going to go away, they’re
not going to lose track of you, they’re going to find you. So the key is to be prepared and again this
is more than the tax problem resolution department which I don’t really
do anything anymore, but I will tell you from the time I did it it’s much
more advantageous to you to approach the IRS with a possible solution
than it is to wait for them to come to you. And there are plenty of good
people out there who do tax problem resolution, I can make a referral
for you. It’s much better to deal with that proactively than re-actively so
I would just tell you that if bankruptcy is an option worth your tax issues,
don’t wait for the IRS to come track you down because that’s not going
to be a good thing. So, anyway for bankruptcy purposes you got
to get those returns filed, so if you think about filing for bankruptcy if
you have any have un-filed returns get busy because that’s something
you’re going to have to get done. I hope this has been helpful. This is Jonathan
Ginsberg here. Please fill free to contact my office with any questions
and I’ll talk to you next time.