Tax Documents Required for Bankruptcy
- Bankruptcy rules require that taxpayers supply the court with a copy of the past year's federal income tax return when filing for bankruptcy. This is required for all bankruptcy filings so that the court can determine which assets belong in the bankruptcy estate. If this information is not supplied to the trustee prior to the Section 341 meeting of creditors hearing, the court can dismiss the bankruptcy filing or place it on hold pending receipt of the tax information. If a return has not been filed, the information will need to be pieced together by the debtor.
- Chapter 13 bankruptcy filings allow individuals to retain their possessions and set up scheduled repayment plans with creditors. This category of bankruptcy requires individuals to produce four years worth of state and federal tax returns for the court appointed trustee. These returns must also have been filed with the state government and IRS. The debtor can request that the trustee extend the time for the initial meeting of creditors by 120 days to obtain copies of all the prior state and federal tax returns. Failure to produce these documents can result in the dismissal of the case.
- The bankruptcy court requires that other documents be produced with a bankruptcy filing besides federal and state tax returns. These documents include information relating to real property including deeds, mortgages, insurance and loans. Documents are also needed to verify wage information including paystubs and bank statements. If the debtor owns a car, the license and insurance information should be provided. All of this information will be used at the meeting of creditors to determine the correct liability of the debtor.
- Once an individual or business files for bankruptcy, the bankruptcy estate is considered its own separate taxable entity separate from the debtor. This means that everything included in the bankruptcy will be known as the bankruptcy estate and handled by a court appointed trustee. This trustee will file a tax return and pay taxes for the bankruptcy estate separately from the debtor's other property. The trustee will request an Employer Identification Number, or EIN, from the IRS and use this number in all transactions for the bankruptcy estate.