Income taxes are dischargeable in bankruptcy if they meet the three year rule; the two year rule; and the 240 day rule.
When you count back for the three year rule (the date on which the return was last due without penalty is more than three years prior to the date the bankruptcy is filed), remember that in 2007, tax returns were due on the 16th of April.
In 2007, April 15th was a Sunday, so returns were due the following day. File your client’s case on April 16, 2010, and those taxes will not be sufficiently aged to be discharged.
My list of things never to take the client’s word for is headed by TAXES. Get a transcript, know whether the client got an extension, then go to the calendar for the relevant year, and make sure you know when returns were due in that year.
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Bankruptcy lawyers sometimes forget: not everyone worried about debt actually needs to file bankruptcy. The anxiety that brings someone to your office may not be grounded in a real understanding of the rights of their creditors.
I recently saw a woman drawing disability pay and looking at very substantial retirement income. It seemed unlikely that she [...]
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April 15th is so ingrained in our thinking as Tax Day that it’s easy to forget that the tax for the previous year is owed on the first day of the next tax year. Payment isn’t due til April 15th, but the obligation exists before the return and payment are due.
Why is this important for [...]
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Real danger for client and lawyer lurks in the emergency bankruptcy petition: file without all the information about the client’s assets and recent transfers and you risk getting family members sued and the client losing assets.
Chapter 5 of the Bankruptcy Code deals with avoidable transfers, property of the estate, and exemptions. Those are potential potholes [...]
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The last check before you file your client’s bankruptcy schedules should be a step back to see if the schedules “tell the story”. The background and the color don’t make it to schedules and SOFA, but you need to read them from the trustee’s point of view to see if they make sense and reflect [...]
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Old and new consumer bankruptcy lawyers have a treasure in John Bates’ masterpiece on the exemption laws of each state and the availability of those laws to non residents in bankruptcy. Check out www.exemptionexpress.com, then send John a thank you.
Why do I care what the exemptions are in any state but California? The Bankruptcy Code! [...]
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When the means test projected disposable income number is greater than 100% of the unsecured claims, full repayment is sufficient. The means test calculation only kicks in under 1325(b) if a party objects; no one objects to repayment of everything that is owed.
A new bankruptcy attorney brought me a B 22 form for a review: [...]
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All three consultations on Friday featured clients intent on filing bankruptcy IMMEDIATELY. Each of them was certain that they had no time before some disaster would befall them if they didn’t file bankruptcy. Yet, as we talked, I concluded the consequences of an immediate filing were worse than the perceived goblins chasing the clients
Waiting, in [...]
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When the means test look back period for a well paid individual includes the end of the year, a bankruptcy lawyer cannot rely on the paystubs to define the tax deductions. That’s because contributions to Social Security and other some other taxes are capped at certain income levels. Wages above the cap are not subject [...]
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Twice yesterday new bankruptcy practitioners asked about how to deal with debts or assets not listed in the debtor’s original schedules. The answer in either situation is amend the schedules. As soon as you know that the schedules are not accurate on a meaningful issue, make them accurate.
For an omitted creditor, you want to add [...]
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Income taxes are dischargeable in bankruptcy if they meet the three year rule; the two year rule; and the 240 day rule.
