For bankruptcy cases filed after Oct. 16, 2005, the Bankruptcy Code requires chapter 13 debtors to file all tax returns that were due within 4 years of the filing of the bankruptcy petition. It is discouraging and a very bad sign for me, as a bankruptcy lawyer, you have a prospective client sitting in front of me and tell me that they haven't filed tax returns for many years.

I had one guy a couple of weeks ago tell me that he "didn't know how long" it had been since he filed, and he didn't know how he would even start. The problem is, once the bankruptcy is filed, a bankruptcy debtor is under a federal court order (in our district here in the Houston division of the Southern District of Texas) to get all delinquent tax returns filed. And if they are not, bam, the case is going to get dismissed.

Our Bankruptcy Court Local Rules require the filing of the tax returns as soon as the case is filed, also. He had come in wanting to stop a foreclosure, he didn't have much income, and in addition to other problems, when he didn't have the tax returns done, and didn't know how he would do it or when he could get around to it, I just had to decline the case, so they guy is likely going to lose his house.

You have some basic responsibilities as a U.S. Citizen and one of them is filing tax returns. I understand that people can get behind, and then once you are behind, become afraid to file tax returns because you are afraid of the IRS. But if you are going to file bankruptcy, the rules are the rules. The GOOD part about getting the taxes filed is, it is done and over with.

Once you file the returns, my understanding is that the IRS rarely will try to prosecute you for not filing, as they would trouble proving the "willfullness" element. Not only that, but if you owe taxes, and you file chapter 13, you can pay the delinquent taxes out over a long period of time, up to 60 months, usually without interest. To know what would happen in your particular case, call my office at 713-772-8037 and make an appointment.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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