Why You Should File Your Tax Returns
It’s Tax Time
It’s tax time. You know you’re going to owe, and you also know you don’t have the money to pay the IRS what you’ll owe them. It may seem like a necessary and even strategic move to not file your return. The bankruptcy court requires you file your tax returns, and excludes the discharge of tax debt associated with unfiled returns.
Like almost every other financial decision we make, a future bankruptcy filing may be affected negatively by a failure to file. A failure to file on time generally will not preclude the discharge of this tax liability provided all other requirements are met. However, if the IRS takes an aggressive approach in response to your non-filing and assesses you a tax burden by a process commonly known as “substitute for return,” the tax burden is considered exempt from future discharge.
While it’s always smart to file your return when it’s due, it’s also understandable when we’re unable to do what’s best. The key in terms of preserving the ability to later discharge the tax debt in bankruptcy is to file a voluntary return prior to the IRS instituting the substitute for return on the debt. If the IRS beats you to it, even a later voluntary filing of a return by you will not undo the exempt nature of the tax debt.
Find Out Your Options
Talk to your tax preparer today about your upcoming tax filing. You can receive an extension for the April filing until October. As you approach October, you can decide whether you can pay the amount owed, or whether you want to apply for monthly installment payments– or a combination of both.
If you have back taxes which are currently unpaid, call the IRS at 800.829.1040 today, to ask for updated information on the account and to find out what your payment options are.
Talk To An Attorney
The relief provided by the bankruptcy code is strong. By educating ourselves, we are enabled to utilize that relief to its fullest extent. If you have questions, call me today at 704.749.7747 and I’ll be happy to give you guidance around taxes or any other financial issue you’re facing. It’s what I’m here for.