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    What is the cutoff date for previous year tax return?

    As I understand it, to file for chapter 7 one needs to provide the last 2 years of returns. So if one was filing on January 1, 2019 will 2017 and 2016 returns be sufficient?

    How about February 1?

    Is there a cutoff date when 2016 return will no longer be sufficient and 2018 return along with 2017 return will be required?


    Thank you

    #2
    No, that would not be sufficient. Bankruptcy requires that you are current with your taxes, and since you would file in 2019, your 2018 taxes would need to be filed before your discharge. The Trustee will insist on this. As for how many years the Trustee will review, is up to the Trustee. Expect that if you file bankruptcy before... April 15, 2019... then you will need to provide your 2016 and 2017 returns as well as file and supply your 2018 return.

    This is especially true in a Chapter 7 where the Trustees are very interested in refunds of tax overpayments!
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


      #3
      The info contained on this website https://www.thebankruptcysite.org/re...led-taxes.html states otherwise.

      Are they wrong?



      Also spoke to 3 different lawyers and all said 2018 will not be necessary.
      One said that the trustee might ask for it, but highly unlikely given the fact that:

      1). Total household income for last two years was 57K and 60K (all of this from my husband), who currently doesn't live with me.
      2). I have no assets, other than $2500 in the bank
      3). The income from my self employment for 2018 is less than 10K.
      4). My husband is not filing for bankruptcy with me (lives separately).
      5) I receive SNAP.
      6). Total refund for the years 2016 and 2017 (from both federal and state) was less than $4,000 for each year.



      Given all this, you still think it will be required in my situation? And the website above is wrong?

      Thanks





      Comment


        #4
        I wrote that it is required to be current on taxes at time of filing. Since the tax year would have ended, and the Trustees are very interested in tax "refunds" during this time of year, it is very likely that the Trustee will ask that you file your taxes. However, if you are under the median and you have sufficient exemptions to exempt any "anticipated" tax refund, the Trustee may become disinterested in pursuing your tax refund.

        This is all about the tax refund, and not so much about the tax return. yes, the code does say for the year in which the tax period ended "and" for which a return was filed, but any anticipated or unanticipated refund must be exempted or the Trustee will want the tax return to be both filed and that a copy be provided to the Trustee.

        SNAP does not make a difference when it comes to exemptions. Your non-filing spouse has no bearing except where you may file your tax returns jointly. Your individual (debtor) Income and the amount of assets you have do not have any bearing either. The question is about exempting a tax refund. Trustees love tax refunds; it's simply that time of year.

        If you file your 2018 tax return before filing for bankruptcy, you will absolutely be required to provide your 2017 and 2018 tax returns. There are two competing things here. First, the requirement to provide your most recent tax year which has ended and for which a return was filed, and the Trustee going after any potential tax "refund" that was not exempted.

        Your attorney consults may be correct in that you can exempt any un/anticipated refund and not have this particular Trustee issue.

        I hope that clarifies why I was relatively certainly that a Trustee is likely to be interested in your tax return.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


          #5
          For the law on this point, see Bankruptcy Code Section 521, subparagraphs (e) & (f): https://www.law.cornell.edu/uscode/text/11/521
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


            #6
            Thank you LadyInTheRed, but as I understand it, the pertinent info in the link above contradicts what justbroke posted above as it specifically states:

            "Debtor shall provide ...." or "Individual who is a debtor shall file with the court"

            "....... a copy of each Federal income tax return required under applicable law"

            Now, as I understand it, no applicable law requires the filing of federal income tax in January or February. Thus neither the court, nor the trustee can make such a request.
            Am I missing something?

            As I understand it, the only time they can make such a request is on or after April 15. If this is so, then how likely would this be if I were to file on January 24? Wouldn't the creditor meeting
            would already have taken place before then?

            I don't mind providing this info to the court, but getting my husband to do it is almost impossible, as he never does it before October. And if I were to do it myself then I would lose on all the credits
            we normally get when filing jointly.

            Now I appreciate that justbroke responded but being that his first answer was completely incorrect, gave me an uneasy feeling, that I shouldn't really rely on any info on this forum.
            His second response appears to also be incorrect, if I correctly understood the info in the above link.

            All this lead me to speak to yet another attorney I found who only does bankruptcy and only pro bono, not directly, but through his paralegal, who informed me that neither the court, nor the trustee can request the previous year's return until the tax due date, unless it was already filed


            I also found this website: https://www.uscourts.gov/services-fo...kruptcy-basics, which contradicts the info in

            https://www.law.cornell.edu/uscode/text/11/521 as it states:

            "Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began)."

            Now it may be construed by one, that this is not really a contradiction as the most recent tax year may mean the most recent tax year required under applicable law, or for which the return was filed. BUT IT DOESN'T STATE THAT. And a layman, for whom I believe this site was designed wouldn't know the difference unless they were to read the actual code, as found in the link posted by LadyInTheRed.

            Is it made so confusing and vague on purpose?

            Is the information contained in https://www.law.cornell.edu/uscode/text/11/521 correct or is the the information contained on the official government site correct?


            Thank you

            Comment


              #7
              That doesn't contradict what I wrote at all. There are three components;
              • tax returns which were due prior to the time that you filed your petition,
              • tax returns which were not due, but you actually filed with the IRS, prior to filing your petition, and
              • tax returns which the Trustee wants because they are interested in any potential tax refund


              What I wrote was related to #3, in that the Trustee's are very interested in tax refunds this time of year (and especially between September and February filers). That does not conflict with the law at all. What you're reading on the US Court's site comes from the Federal Rules of Bankruptcy Procedure (FRBP) which helps to guide the court. FRBPs are based on the "statutory" portion of the United States Code. So, FRBP 1007 speak to the "procedures" around what you need to do, but the USC code is always controlling. In fact, 11 USC 521 lists debtor duties and that you must cooperate with any Trustee request.

              As I understand it, the only time they can make such a request is on or after April 15. If this is so, then how likely would this be if I were to file on January 24? Wouldn't the creditor meetingwould already have taken place before then?
              This is not the case. The code, in 11 USC 521, as I eluded, reads...

              (f)(1) At the request of the court, the United States trustee, or any party in interest in a case under chapter 7, 11, or 13, a debtor who is an individual shall file with the court...

              at the same time filed with the taxing authority, a copy of each Federal income tax return required under applicable law (or at the election of the debtor, a transcript of such tax return) with respect to each tax year of the debtor ending while the case is pending under such chapter
              This clearly gives the Trustee the authority to request your tax return even if you haven't filed it for 2018 (and it's now January 2019). The Trustees will keep your case open until you file the tax return. Hence the "while the case is pending" is in the code. It's not a get out of jail free card by simply saying "I haven't filed taxes for that period." While taxes are due by April 15th, that doesn't mean that they aren't "required" under applicable law. A deadline is different than a requirement.

              The confusing part is that at the time of filing you're to file all tax returns for the two (2) years preceding the case which have already been filed. This is simply so that you don't need to "file" taxes before you file your petition. But, you must have all tax returns filed, and turned over the Trustee, for at least the 2 preceding years, and it may include a third year if your case crosses the December 31st (individual) income tax year. It is rare, but in some cases, the Trustee may even get another year of tax returns if you case remains open more than a year. Trustees will keep your case open to deal with tax refunds, unless your attorney already back-calculated the average refunds into Schedule I. Trustees keep a case open until the Estate has been entirely liquidated and that could mean waiting on a tax refund, a lawsuit, liquidate real or personal property, or the property from undoing a preference.

              If your husband doesn't do it, the case will remain open. Eventually, the Trustee will make a Motion to Comply With Trustee's Demands under 11 USC 521 and may seek to dismiss your case for failure to cooperate. These are must-do things.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment


                #8
                Originally posted by justbroke View Post
                That doesn't contradict what I wrote at all. There are three components;
                • tax returns which were due prior to the time that you filed your petition,
                • tax returns which were not due, but you actually filed with the IRS, prior to filing your petition, and
                • tax returns which the Trustee wants because they are interested in any potential tax refund

                Wow! Really?! It absolutely does. You are either totally oblivious to what I wrote, or cannot except the fact that you are wrong.

                a copy of each Federal income tax return required under applicable law

                The filing of Federal income tax is NOT REQUIRED UNDER APPLICABLE LAW UNTIL APRIL 15.

                Thus it follows that said tax return cannot be requested until that day.

                Any more mental gymnastics?








                Comment


                  #9
                  Originally posted by NewStart6357 View Post
                  Any more mental gymnastics?
                  Nope. No gymnastics. Immediately after what you put in large letters, the sentence continues... it ends with... "in respect to each tax year of the debtor ending while the case is pending" The law does not read "when the tax becomes due." It reads for "each tax year... ending."

                  Unfortunately, a bankruptcy case is pending until the Trustee administratively closes the case. This is exactly how Trustees take un-exempted tax refunds from debtors who have not filed a tax return yet. Most attorneys will attempt to exempt any anticipated tax refund and/or use an average refund and calculate that back into the current monthly income (CMI) calculation. Such action would negate the Trustee requesting the tax return (to determine the tax refund).

                  How else is the bankruptcy estate allowed to both know and claim a tax refund as part of the bankruptcy estate? Perhaps the game should be to file your Bankruptcy case between January 1 and April 15th so that the Trustee can't require the prior year's tax return? I don't understand what you're trying to say. Maybe we're talking past each other. To be clear, I'm saying that the Trustee (or any creditor for that matter), under 11 USC 521, can request the return for "each tax year... ending" while the case is still open (not closed). I'm not saying that a debtor has to file such tax return before they file their bankruptcy. I'm also not saying that the debtor has to file those returns with the Court (docketed) itself.

                  Here's where it may have gotten confusing. Your initial post was about what tax returns you may need to file with your petition, if you filed after January 1st and before April 15th. I wrote that 2016 and 2017 would be "required" upon filing. I also wrote that the Trustee will likely insist on you also filing your 2018 tax return if they are interested in any non-exempt tax refund, and that this is a big deal for Trustees this time of year. I don't know where the communication broke down. The Trustee absolutely has the right to request any tax returns for any year which ended before you file and while the case is pending. Two different requirements there; what's required upon filing the petition, and the other the Duties of the Debtor under 11 USC 521.

                  Unless I am completely missing something, which I could be doing.

                  Last edited by justbroke; 01-26-2019, 12:13 AM.
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog


                  I am not an attorney. Any advice provided is not legal advice.

                  Comment


                    #10
                    At the risk of reviving an old thread (my apologies): I got my 2018 refund back on 01/30, and it's long since been spent on living expenses. I also spent all of my 2017 refund on living expenses pretty much the same month I got it. Can the Trustee come after money I don't technically have anymore?

                    Comment


                      #11
                      Originally posted by M42 View Post
                      At the risk of reviving an old thread (my apologies): I got my 2018 refund back on 01/30, and it's long since been spent on living expenses. I also spent all of my 2017 refund on living expenses pretty much the same month I got it. Can the Trustee come after money I don't technically have anymore?
                      It depends!

                      If you haven't filed and it has been spent, then the answer is no, the Trustee can get money from you that you don't have.

                      If you have filed a Chapter 7 before receiving the refund, and you did not exempt the anticipated/unanticipated tax refund, it may be property of the bankruptcy Estate and the Trustee may want it.

                      If you have filed a Chapter 13 before receiving the refund, and you did not exempt the anticipated/unanticipated tax refund, you may have to turn it over the the Trustee. (Pre-confirmation issues can affect this as it may depend on when the plan is confirmed.)

                      And probably some other combinations of those situations. Bottom line is that receiving a tax refund just after filing, could mean that the money is property of the bankruptcy estate. It will depend on your exemptions and/or Chapter 13 plan as to whether you can keep the money.

                      (In some limited cases, however, the Trustee could recover money from "creditors" to which you made one or more preferential payments. But, that's another thing, and it's not recovered from you personally.)

                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog


                      I am not an attorney. Any advice provided is not legal advice.

                      Comment


                        #12
                        Originally posted by justbroke View Post

                        And probably some other combinations of those situations. Bottom line is that receiving a tax refund just after filing, could mean that the money is property of the bankruptcy estate. It will depend on your exemptions and/or Chapter 13 plan as to whether you can keep the money.
                        Sorry, I should've mentioned that I plan on filing on 04/30. So I should be OK.

                        Comment


                          #13
                          In response to the initial discussion in this thread..."will 2017 and 2016 returns be sufficient?"....I filed Ch7 at the very end of January and sent my 2016/2017 tax returns to Trustee since I had not done my 2018 taxes yet but was expecting a relatively small refund (less than $1k).

                          At my 341 in early March, Trustee just asked if I had filed 2018 yet/was I expecting refund, I told him that I had not but was expecting a small refund, he asked how much, then just moved on and said "closed".

                          Comment


                            #14
                            I think there is divergence here between what is technically required by law and what will actually happen. I agree with justbroke 100% that the trustee has the right to ask for your 2018 tax return and can keep the case open until he receives it. If he refuses to close the case and requests the tax return what are you really going to do about it? Sue him? File a motion to compel him to close the case? HAHAHA! Let's see how far that gets you.

                            The other side is, what will the trustee actually do? He is not legally obligated to obtain the 2018 tax return in order to close the case. If your particular trustee doesn't feel like it's worth the extra paperwork he will likely breeze right by it just like in Ipacalypto's case. I don't think there is any really way to predict what the trustee will actually do. I paid my estimated taxes owed to the IRS for 2018 before filing and I never receive a refund. I'm never really able to file until October and I sent my payment with a request for extension. My lawyer really doubted that the 2018 return would even come up other than a routine question of, "do you anticipate a tax refund?".

                            Part of what makes this process so scary is that the outcome is really unknown. We have laws but what actually happens is hugely dependent on the discretion of the trustee and to a lesser extend the judge.

                            Comment


                              #15
                              Brokensystem, you communicated that better than I did. There's the practical and the actual. It's the reality that the diferrence between the practical and actual are night and day. I like to prepare people that what they believe to be the case, can be suddenly transformed by the Trustee. The Trustee gets to rely on 11 USC 521 which compounds the debtor to comply with the Trustee's requests. The Trustee can always have your discharge revoked (up to a year after the discharge is entered, with cause). That hardly ever happens, but that is their weapon for a debtor that has the discharge and refuses to comply.

                              Regardless of what we think about whether the Trustee could compel a debtor to file a tax return that was done after the date of filing, is not without issue. The Trustee could, as they did here, seek to revoke the discharge for failure to comply under 11 USC 521 (Debtor Duties).

                              justbroke's study guide: Here are some cases that reach the same conclusion. (There are more cases, these are some of the more interesting cases.)

                              See Stein v. Stubbs (In re Stubbs) 565 B.R. 115 (B.A.P. 6th Cir. 2017), where the 6th Circuit BAP overruled the lower court and stated that the Trustee could pursue a Rule 2004 Examination as a way to compel the debtor to turn over tax returns. The court revoked the discharge.

                              The Trustee was concerned about a potential tax refund being an estate asset. Since Stubbs had not filed her 2014 tax returns (which were not due until April 2015), the Trustee completed the meeting of creditors in February 2015, and instructed Stubbs to send him a copy of her 2014 tax returns when filed and to not spend any refund she received. Stubbs received her discharge on April 29, 2015....

                              When the Trustee did not receive the tax returns nor hear from Stubbs by September 2015, he moved to conduct a Rule 2004 examination of Stubbs...

                              Stubbs did not appear...

                              Later that same day, November 4, 2015, the Trustee filed an adversary proceeding to revoke Stubbs' discharge pursuant to § 727(d)(2) and (3). The Trustee alleged that "[Stubbs] disobeyed an Order of the Court in that she did not appear for examination at the time and send the tax returns to the Plaintiff ...," also noting that Stubbs neither requested the examination and document production be postponed nor rescheduled.
                              See also:

                              http://www.ianb.uscourts.gov/publicw...%20WANDVIK.htm

                              https://www.govinfo.gov/content/pkg/...bk-01758-0.pdf

                              What happens if I don’t give the bankruptcy trustee my tax refund (revisited)?
                              Last edited by justbroke; 03-20-2019, 10:07 PM.
                              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                              Status: (Auto) Discharged and Closed! 5/10
                              Visit My BKForum Blog: justbroke's Blog


                              I am not an attorney. Any advice provided is not legal advice.

                              Comment

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