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Do I have to file all my back taxes before I file bankruptcy?

Yes. You cannot discharge your taxes if you have not filed them and waited the appropriate amount of time. Also, it is a crime not to file your taxes. Most importantly, if you have not filed your taxes, your bankruptcy case can be dismissed.

Also, in 2010 the Internal Revenue Service has a new policy it is enforcing where, if you do not file all of your tax returns before you file chapter 13 bankruptcy, then it will immediately file a motion to dismiss the case. Also, if you do not file tax returns due for the years you are in the chapter 13 bankruptcy plan or if you do not pay your taxes for each year you are in the chapter 13 bankruptcy plan then it will file a motion to dismiss immediately. It has always had this power, but NOW it is strictly enforcing these rules.

The bankruptcy trustee in a chapter 7 bankruptcy may be able to take any refund you are owed. This could be prevented in many cases by having done your taxes before you file. In a chapter 13 bankruptcy there is no way to figure your payment plan until we know what you owe in back taxes. Your case will be dismissed if you have not proven that you have filed all of your tax returns and provided proof of that to the bankruptcy trustee.

Finally, if you are due a refund because of a loss carry-forward for previous years’ business losses then you should tell your attorney so that you can file a split year return and get the refund before you file bankruptcy because if you do not YOU WILL LOSE THE LOSS CARRYFORWARD and the refund. This could be a substantial loss for some business clients.

  • Learn More About Bankruptcy

    If its time to start considering a step toward bankruptcy we're here to help. I have been helping people through the process of filing bankruptcy in South Carolina for over 20 years. We are here for you if you have questions.
  • Download Bankruptcy Guide

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  • Can I go to Jail for not Paying my Bills?

    No, not unless you committed a crime in the creation of the debt (for example, fraud). Simply borrowing money and not being able to pay it back is not a crime. Many creditors representatives will tell you lies on the telephone and say that they will have you put in jail. Perhaps they are too ignorant to know they are wrong or that it is illegal for them even to say that. See More Bankruptcy Q&A