Chapter 13 Bankruptcy–Need to Send in Your Tax Forms
My name is Lori Rupp and I’m Mr. Weed’s Chapter 13 paralegal.
I’ve been a bankruptcy paralegal since 1998 and before I worked for Mr. Weed I even worked for a Chapter 13 Trustee in Michigan for two years.
Chapter 13 bankruptcy is more complicated than a Chapter 7 bankruptcy in a lot of ways. One of those ways is you are required to send the Chapter 13 Trustee a copy of your tax return every year while you are in the bankruptcy.
Here are the rules about your taxes in Chapter 13:
1. You are required by law, 11 USC 521(f)(1), to send the Chapter 13 Trustee a full copy of your federal and state tax returns every year that you are in bankruptcy. That means the returns themselves and all the attached schedules. It doesn’t matter if you owe or are getting a refund, you have to send a copy of the return no matter what. The Court doesn’t remind you and the Trustee doesn’t remind you. You are just supposed to remember to do it on your own.
2. You are not allowed to file for an extension on your taxes while you are in bankruptcy. You are required to file your taxes on time every year.
3. Depending on which Judge you have, you might be required to send the Trustee any refund you receive over $250.00. If you have any questions about sending your refund to the Trustee you should contact me and I can help you. (But you need to send in the tax forms, even if there is no refund!)
Last year, a lot of people didn’t send the Trustee copies of their return. As a result, the the Chapter 13 Trustee, Thomas Gorman, filed motions to dismiss all of those cases. That left us, and the people who hadn’t sent the returns in on time, scrambling around at the last minute trying to stop their case from being dismissed when the whole thing could have easily been prevented by sending the returns in when they were required.
One Judge joked about the guillotine for people in chapter 13 who don’t send in their tax forms.
And the Judges were mad! They were not sympathetic because they expected everyone to be responsible and send their taxes in on time. The Judges did not know before that this had been such a problem, and they said it better not be a problem again.
Judge Robert Mayer said his answer to excuses would the “the guillotine.” (Only a joke, of course, but a joke that means he is really mad! Usually, Judge Mayer is a very patient guy.)
So this year, we’ve become more involved in making sure everyone gets their tax returns to the Trustee. In February, we sent out a letter to all of our Chapter 13 clients asking them to send their tax returns to me. That way, we can keep track of who sent their returns in and who didn’t and I can send the returns to the Trustee via UPS with a tracking number so we know they are received. We don’t want to have to scramble around again this year like we did last year!
After the February letter, some people sent me their taxes but a lot didn’t. They have continued to trickle in but we are still missing returns for more than half of our clients and they are due today! Since we haven’t gotten the response we had hoped for Mark Sullivan, the attorney who’d have to go to Court on the motions to dismiss, has started calling people reminding them they need to send their taxes in.
We do not want your case to get dismissed over something as simple as sending your tax returns to the Trustee.
So if you haven’t already, please send a complete copy of your 2011 Federal and State taxes to me immediately so I can check your name off my list and forward them to the Trustee.
You can fax them to me at (703) 635-2848, you can email them to me at email@example.com.
It’s really important that this get taken care of right away!