New Bankruptcy Law Requires Tax Return Filing

As a response to the political pressure of banks and credit card companies, Congress passed the new Bankruptcy Law with many onerous provions to prevent debtors from being discharged. Most debtors will be forced into a payment plan, Chapter 13, rather than a discharge of debts under Chapter 7. In order to have their payment plan confirmed, Chapter 13 debtors must also file all tax returns with the IRS for the four-year period before the bankruptcy petition. The debtor must establish filing by the first meeting of creditors.

Seven days before the first meeting of creditors, debtors must provide trustees a copy of their most recently filed federal tax return or a transcript of the return. Similarly, copies of amendments to such returns, and any past due returns filed while the case is pending, must also be filed with the court if requested. The returns or transcripts must be provided to the court at the same time they are filed with the IRS.

If the returns or transcripts are not filed, a Chapter 7 discharge will not be granted, or a Chapter 11 or 13 plan will not be confirmed. In addition, debtors must also provide a copy of the tax return or transcript to requesting creditors. This will make normally private tax and personal financial information available to the Public.

Click Here for information on getting free transcripts from the IRS.

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