After the “fallout” from 2008, we all probably know someone who has filed Bankruptcy – Many of whom wiped out a majority of their debt, including some or all of their IRS tax liability. Unfortunately, you may have a hard time keeping up with “the Joneses” down the street who are still bragging about kicking the IRS to the curb by filing bankruptcy.
In order to file for bankruptcy, you must have filed, or present with your petition for bankruptcy, your tax returns – tax returns showing you are current in filing your taxes. So even if you haven’t filed those returns yet and are considering filing for bankruptcy, you must file the past due returns and include them as part of your bankruptcy petition.
Furthermore, in order to discharge tax debt from late filed returns, the late return typically must have been filed two years prior to the date of filing the bankruptcy petition. If this caveat makes bankruptcy look much less enticing, you might consider holding off filing your bankruptcy petition.
Bottom Line: If you want to discharge tax debt, you must timely file your tax returns.
If you haven’t filed – FILE YOUR TAX RETURNS – and wait out the two year period before filing for bankruptcy!