Can Filing my Tax Returns Late Affect My Bankruptcy?

Filing for bankruptcy in Glendale is not an easy thing to decide. But getting your finances back in order is the best way to getting your life back on track. There are many factors that could bar you from filing for bankruptcy and regaining your monetary footing. Shockingly enough, how and when you file your taxes could have an impact on the type of bankruptcy you can file or if you can even file at all. Talk to your bankruptcy lawyer so that they can answer any questions you may have about filing for bankruptcy, and if your taxes will somehow affect your bankruptcy.

filing tax returns late affect bankruptcy

So, can filing your tax returns late affect your bankruptcy? This is a difficult question to answer, but one that is asked often. In this instance, there are a few court decisions that very little to do with the law of your taxes and filing for bankruptcy and focus more on the actions of the taxpayer themselves. Sometimes, even the IRS does not support the verdict of some court decisions. Therefore, filing a tax return late means that you cannot discharge it when you file for bankruptcy. This is sometimes a harsh conclusion to come to, but it really depends on where your hearing is and how lenient the judge is.

Depending on who is deciding the outcome of your bankruptcy, there are two schools of thought on the matter. The first is that the fifth and tenth circuits have caused chaos in the bankruptcy code, along with the federal statutes and case laws in order to come to the conclusion that tax debt is not discharged if the tax return is filed late. Even if it just one day late, it is not able to be discharged. This may seem like a harsh conclusion, but again, it really depends on where you are and who is presiding over your case. You may end up getting a break.

The next school of thought is slightly more lenient. The fourth, sixth, seventh, eighth, and eleventh circuits follow the 1984 tax court decision. The case of Beard vs. Commissioner had four factors involved and the courts tried to find if there were reasonable and honest attempts to satisfy requirements of tax law. These circuits try to examine the actions of the person and determine whether or not they tried to fulfill their tax requirements. In some cases, they try to determine this based solely on the face of their tax return. This is a more understanding system to use and it can sometimes be to your benefit. If you have tried to file your taxes and make sure that everything is taken care of, but finding that you owe money you cannot pay, this system could help you when you finally file for bankruptcy.

There are obviously discrepancies in these rulings, but that’s where the ninth circuit of appeals comes in. In one particular case, someone didn’t file their taxes for eight whole years, and three years after the IRS’s deficiency notice. The ninth circuit took up the ideals of the eighth circuit and concluded that this was not a reasonable or honest attempt to file one’s taxes. If it had been within a month or two, or maybe even a year, then this could have been understandable, but they deemed that eight years was not a reasonable amount of time to file your taxes. Especially when it is to be done yearly.

tax returns late bankruptcySo, if you need help filing for bankruptcy, My AZ Lawyers can help you work out all of the details. It’s not an easy decision to make, and there are some circumstances that may or may not hinder the process. Taxes are a huge part of filing for bankruptcy, so with our Glendale bankruptcy lawyers, we can help you no matter what. We know that you take your financial status seriously, and we will help in whatever area we can. Contact us for more information, and schedule a free consultation today so you can take the next step to reclaiming your financial footing!

My AZ LawyersCandace Kallen
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Mesa, AZ 85202
Office: (480) 263-1699

20325 N. 51st Ave., Suite #134
Glendale, AZ 85308
Office: (623) 640-4945

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Tucson, AZ 85701
Office: (520) 306-8729

2016-09-27T20:55:24+00:00 September 27th, 2016|bankruptcy advice|

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