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Bankruptcy and taxes- on time

No less than twice this week in my little Shepherdsville office I was visited by potential bankruptcy clients that had not filed taxes in years. WHY? Because they owed…

The logic behind this thinking is that if I don’t file I therefore don’t owe. People assume that if there is no return filed that the tax man won’t come knocking. This simply isn’t the case.

Whether a person files taxes or not Uncle Sam still gets tax information on that person. For instance, just because a person never mails the IRS a 1099 does not mean a copy of that information did not get to the IRS. Try filing a return and forgetting to add a W-2- the IRS usually will catch your mistake. Uncle Sam is just like Santa, he knows if you have been good or bad so file your taxes for goodness sake!

What usually will happen is that Uncle Sam will assume that if you do not file a return that you have no deductions. The IRS will take your income and compute your tax liability. If you owe, based on that estimate, you’ll soon be getting love notes from the IRS. You’ll also get notice of penalties and interest.

When viewing taxes in a bankruptcy context, one must remember five simple rules to get taxes discharged:
1. The return was due more than three years ago.
2. The tax return was actually filed at least two years ago.
3. The tax was assessed 240 ago.
4. You did not fib on the tax return.
5. You are not guilty of tax evasion.
The lessen learned is file your taxes on time. Your taxes may be dischargeable in bankruptcy- however they aren’t if your return was not filed long ago.

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One Response to “Bankruptcy and taxes- on time”

  1. I have recently started a site, the information you provide on this website has helped me greatly. Thanks for all of your time & work.

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The attorneys of Wantland Law in Shepherdsville, Kentucky, advise and represent individuals and families in bankruptcy cases and debtor-creditor negotiations in Bullitt County, Nelson County, Spencer County, Hardin County, Okolona, Jefferson County, Louisville, and such communities as Mount Washington, Brooks, Lebanon Junction, Bardstown, Taylorsville, Elizabethtown, Radcliff and Fort Knox.

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