Tuesday, April 9, 2019

Bankruptcy and Tax Day, April 15

Chapter 13. 

I just received a notice from the Chapter 13 Trustee in the Jacksonville Division of the Middle District of Florida reminding me that taxes are due to be filed no later than April 15.  Of course, we all know taxes are due on the 15th.  So what's the big deal?

The Trustee was pointing out that a copy of the tax return, or a copy of the extension form, is due to the Trustee by the end of the day on the 15th.  The greatest impact this will have is on the debtor awaiting confirmation of their Chapter 13 Plan.  The Trustee will not agree to allow confirmation unless they have a copy of the tax return, or extension form, as filed with the Internal Revenue Service (IRS).

I suspect this will also effect confirmed cases, as each debtor is required to submit either a copy of the return, or a copy of the extension, as filed with the IRS, or a affidavit stating he or she was not required to file a tax return for the current year.

Chapter 7.

While I have not directly received a notice recently from the Chapter 7 Trustees reminding me to notify my clients, each of the Chapter 7 Trustees makes it well known at the Meeting of Creditors, and through written correspondence, that they need a copy of the tax return when filed, and not to spend any of funds from a tax refund until after notifying the Trustee, as some of the tax refund proceeds may me property of the bankruptcy estate.

Not In Middle District of Florida?

This is what happens in the Middle District of Florida.  If you have filed bankruptcy in another jurisdiction, or are considering filing bankruptcy, you should contact a local competent bankruptcy attorney practicing within your jurisdiction regarding your tax return and its effects on your bankruptcy.