As we all know, April 15 is a bad day for almost all of us. This is the day we are supposed to report to the beloved Internal Revenue Service (and usually our state revenue departments) and find out how much we owe them in taxes (and, yes, that includes people who get a refund – remember that is just your money you “overpaid”). In our self-reporting system you have a legal duty to file your tax returns by the deadline or timely request an extension. While there are a few negatives for missing the deadline, most importantly penalties and interest, for purposes of this post and this website I will mention one related to Bankruptcy. While the general rule is that taxes are generally not dischargeable in Bankruptcy, there is an exception for tax debt from several years ago. We discuss that exception in this prior post. One of the requirements for getting a discharge of taxes is that “honest” tax returns have been filed for those taxes. In recent years, many Bankruptcy courts, and higher appellate courts, have held that those returns must have been timely filed and if they were filed even one day late, the exception does not apply. Even courts that do not follow this harsh “one day late” rule (including those Georgia, Florida and Alabama) have considered the timing of late filed returns, including whether they were filed only after the IRS sends nasty notices.
If you are reading this and looking at Bankruptcy in the near future, this post might not help you because the “look back” period for discharging taxes is 3 years or more. Most people also do not consider that they may be facing Bankruptcy years from now. This is just a general reminder to file your tax returns on time (you too, “sovereign citizens“) or request an extension if you need more time.
Finally, as it is 2016 then this is posted, the actual deadline for filing returns this year is Monday, April 18, 2016. Because the deadline is usually “officially” April 15, we used that date in the title for future years.
Scott Riddle is a Bankruptcy lawyer in Atlanta, Georgia. The best way to contact us is by phone at 404-815-0164. You can also email scott@scottriddlelaw.com, or contact us through the contact page.