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

Many of my clients ask for the automatic extension of time to file their tax returns, which is now until Oct. 15. If you have an extension, don't forget that October 15 is almost here.

If you are filing for bankruptcy prior to then, the Bankruptcy Court and trustee will want copies of your tax returns for this last year right away, so you don't have until October 15. The extension may be acceptable to the I.R.S., but it is not acceptable to the Bankruptcy Court or your chapter 7 or chapter 13 trustee.

You will just have to get the tax return done sooner. If you are going to owe taxes and you are filing bankruptcy, that is not necessarily an immediate problem. If you are filing chapter 13 bankruptcy, your chapter 13 plan can provide (really must provide, unless the IRS agrees otherwise) to pay your delinquent income taxes during the 3 to 5 year term of the plan, usually without interest.

Chapter 13 can really help you pay delinquent income taxes. The penalties are usually treated as general, unsecured claims so they do not have to be paid in full during your plan. If you are filing chapter 7 bankruptcy, the I.R.S. is "stayed" or prohibited from trying to collect the taxes from you, for at least the time that your case is pending, which is typically 3 to 4 months.

And after that, you can usually enter into an "Installment Agreement" to pay them over time. Or if you owe a really insurmountable amount of taxes and you are filing chapter 7 bankruptcy, after the bankruptcy you may want to consider an "Offer in Compromise."

But if you really cannot afford to pay anything, you may need to ask the I.R.S. to put you in "currently not collectible" status, at least until you get back on your feet.  Your situation is different from everyone else's. It's best to consult with an expert about your circumstances. If you live in the Houston, Texas area you can always give my office a call at 713-772-8037 or make an appointment on my website at www.jthomasblack.com.

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