In a previous blog entry, I mentioned that a bankruptcy filing in U.S. bankruptcy court must contain a complete inventory of assets, income, and debts. To conceal any information is a federal crime. That being said, keep in mind that April 15 is right around the corner. Before we know it, tax season will be upon us, and one of your bankruptcy assets could be an anticipated federal (or state) tax refund–even if you don’t actually have “possession” of it yet. If you are gearing up for an individual bankruptcy in Wisconsin, your bankruptcy “estate” (i.e., all your property that could be pooled to pay off your outstanding debts) must include the anticipated refund as a line item even if your tax return is as yet un-filed. If you’re not 100 percent sure about what, if anything, you’ll get back from the government, this entry can be listed as a “possible tax refund” in the paperwork.
In some instances depending on the amount of the payment and/or other factors, the tax refund may possibly be considered exempt property that you can keep depending upon the bankruptcy laws of Wisconsin. As they often say on TV, however, “don’t try this at home.” This is the kind of complex legal technicality that only a seasoned Wisconsin bankruptcy lawyer can figure out. But as mentioned above, the first thing is to make sure you have informed your Wisconsin bankruptcy counsel or debt consolidation lawyer that you are expecting a refund for overpaying your taxes.