Chapter 13 debtors in the Eastern District of Kentucky will now have a very short deadline for filing their prepetition tax returns with the taxing entities as required by section 1308.
WHICH YEARS: Debtors who file a chapter 13 petition on or after January 1, 2026 must file with the taxing entities the tax returns for these tax years to comply with section 1308 and get a plan confirmed:
2025
2024
2023
2022
NEW DEADLINES: Effective with petitions filed in the EDKY on or after January 1, 2026, tax returns must be filed before the LATER of April 15, 2026 or 60 days after the section 341 meeting of creditors is held.
From now on, debtors who file for chapter 13 relief in the EDKY will NOT get to take advantage of the IRS’ automatic extension until October.
WHO SETS THE DEADLINE? Returns required under section 1308 must be filed with the taxing entities before the date first set for the section 341 meeting of creditors. Congress gave to chapter 13 trustees the discretion to hold open the 341 meeting for a reasonable time, with maximum limits that I have always followed. I will no longer hold open the 341 meetings for those maximum time periods.
WHY THE SHORTER TIME? Failure to timely file all required prepetition tax returns is the number one reason confirmation of plans is delayed. I am holding an extraordinary amount of money in cases that have not yet been confirmed, and it isn’t fair to parties in interest. It’s a perpetual problem.
SO WHAT? Well, if the deadline is not met, I will promptly file a motion to dismiss the case. Section 1307(e) says that if a party files a motion to dismiss for failure to file tax returns as required by section 1308, the court, after notice and hearing, SHALL dismiss the case (or convert the case, whichever is in the best interest of creditors and the estate). Once I file a motion to dismiss, don’t expect to get any further extension of time.
DEBTORS’ ATTORNEYS: You must let your clients know that filing the petition does not give them breathing room when it comes to getting their prepetition tax returns filed. Let your clients know that even if they have always waited until October 15 to file their tax returns, they don’t get that extension if they want to stay in their chapter 13 case. You might need to consider these shorter deadlines in deciding when to file the petition.
EXCEPTIONS? If the debtor cannot get their tax returns filed by 60 days after the 341 meeting and they have a really good reason, discuss the issue at the 341 meeting so we can come up with an appropriate deadline. You can also file a status report explaining why the tax returns will not be timely filed and offering a date by which the returns will be filed. Section 1308 also gives debtors the opportunity to request an extension of time from the court under very limited circumstances.
CONCLUSION: I know most debtors’ attorneys already advise their clients (repeatedly) of the need to get their prepetition tax returns filed. Now attorneys will need to turn up the heat and emphasize the very short period of time the debtors will have to file their tax returns and the grave consequences of missing the trustee’s deadline. Let debtors know that they have roughly 3 months from the petition date to get their tax returns filed.
