Can You File Bankruptcy Without Filing Taxes?
Can You File Bankruptcy Without Filing Taxes?
Filing for bankruptcy without having filed taxes is possible, but it depends on whether you were legally required to file tax returns in the first place. You can still proceed with bankruptcy if you aren’t required to file taxes.
Still, the bankruptcy trustee will likely require you to submit a declaration or affidavit explaining why you did not file, and you must sign it under penalty of perjury.
Can You File Bankruptcy Without Filing Taxes in the US?
In the US, bankruptcy laws require tax documentation for most filings. If you are filing for Chapter 7 bankruptcy, you must provide your most recent tax return.
The trustee will review it to verify your income. If you are filing for Chapter 13 bankruptcy, you must submit tax returns for the past four years, as the trustee uses these documents to determine whether you owe taxes and how much you can afford to repay.
If you have not filed your most recent tax return and are filing for Chapter 7 bankruptcy, you could face challenges. Under 11 USC 521(e) of the U.S. Bankruptcy Code, you must provide your latest tax return to the case trustee no later than seven days before the meeting of creditors. If you fail to do so, the case could be dismissed.
Additionally, under 11 USC 521(f), if you submit an outdated tax return while showing current income, you may be required to file past-due tax returns with the court. You could also be required to continue filing your tax returns with the court for a certain period.
Can You File Bankruptcy Without Filing Taxes in Canada?
The CRA mentioned that tax obligations do not disappear when filing for bankruptcy. If an income tax and benefit return was required for the year before bankruptcy but was not filed, the trustee must file it immediately on your behalf.
Additionally, the trustee is responsible for preparing a pre-bankruptcy return covering the period from January 1 to the day before the bankruptcy date.
In some cases, the trustee may also file an in-bankruptcy return to report income generated from liquidated assets, such as RRSPs or income from businesses the trustee winds up to benefit creditors.
For the period following bankruptcy, it is typically your responsibility to file a post-bankruptcy return, covering income from the bankruptcy date through December 31. However, if the trustee files this return instead, it must be clearly marked as such.
When filing any tax return related to bankruptcy, it is important to clearly indicate above the identification section of the tax form whether it is a pre-bankruptcy, in-bankruptcy, or post-bankruptcy return.
The trustee should not list their own address in the identification section, as the Office of the Superintendent of Bankruptcy already has the required trustee contact information on file.
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