New Deadlines for Filing Tax Returns as Required by Section 1308

I have a new policy regarding the deadlines for filing tax returns pursuant to section 1308 of the Bankruptcy Code.

REFRESHER:  Section 1308 requires debtors to file with the tax authorities all tax returns for all tax periods ending during the four (4) years before the date of the petition.  The plan cannot be confirmed until these tax returns have been filed, and a case can be dismissed for not timely filing the returns.

If the required tax returns have not been filed by the day before the first scheduled section 341 meeting of creditors date, the trustee may hold open the meeting for a reasonable period of time to allow the debtor additional time to file the tax returns, subject to a maximum number of days depending on whether the return was past due at the time of the petition or not.

FIRST POLICY CHANGE – WHICH YEARS’ TAX RETURNS MUST BE FILED?:  If a chapter 13 case is commenced on or after January 1, 2019, the debtor must file tax returns for 2018, 2017, 2016, and 2015 before a plan can be confirmed.  Those are the tax periods ending during the four years before date of the petition.  The 2018 tax return isn’t due until April 15, 2019, but the 2018 tax period ended on December 31, 2018.

Think of it like a timeline, working backwards (right to left):

SECOND POLICY CHANGE – TRUSTEE’S DEADLINE:   I am now setting 60 days after the date first scheduled for the 341 meeting as the deadline for getting tax returns filed.  If the 60th day falls on a Saturday, Sunday, or federal holiday, the deadline will be the next business day.

I had been allowing 120 days, but the delay in confirmation meant a delay in paying creditors (and debtors’ attorneys) in a significant number of cases.

If the case is commenced any time in 2019, the 2015, 2016, and 2017 tax returns are past due.  Those must be filed within 60 days after the first section 341 meeting date.  For 2018 tax returns, the debtor has until the later of April 15 or 60 days after the first 341 meeting date.

Section 1308 says that I may follow the deadline for filing tax returns under an extension from the IRS (approximately October 15), but I have decided not to do so.  My deadline will not change even if the debtor has an extension from the IRS.

ACTUAL DEADLINES FOR 2019 CASES:

PRACTICE TIPS:

Debtors’ attorneys, make sure your clients know that while they might get some breathing room once they file their chapter 13 petition, they must take the next hard step and get their tax returns prepared and filed with the IRS and Kentucky Revenue Department promptly.

If your client needs money to pay a tax preparer and cannot delay the chapter 13 petition, set up a step plan with a nominal plan payment in the first month and use the rest of that money to get the tax returns prepared postpetition.

If the debtor cannot meet my deadline, you may ask the court for an extension by filing a motion before my deadline expires and showing by a preponderance of the evidence that the inability to file the tax returns by the deadline is due to circumstances beyond the control of the debtor.  See 11 U.S.C. § 1308(b)(2).

After my deadline has passed, if I do not have evidence (an amended proof of claim or an affidavit of the debtor) that all required tax returns have been filed, I will file a motion to dismiss the case.