Complaint to determine dischargeability of taxes?

[limabean]

I am pro se no asset Chapter 7. So far so good - 60 days will be up soon with no objections or anything untoward that I can see. My husband is filing jointly and has substantial taxes owed that are technically dischargeable as we meet all the criteria. We have confirmed this with a very reputable tax/bk lawyer.

Should we file a complaint to determine the dischargeability, or simply leave it and assume it will be discharged? The lawyer advised we did not need to file the complaint, but I am worried and would like finality of knowing or at least being able to discuss it in front of a judge! If we do not file now and the IRS later asserts that the debts were not discharged, can I return to the court to determine dischargability, or is this my one time to do that?

The IRS did file a Lien, but we have no assets of any worth. Should we take the time to motion to waive the lien (or whatever the right term is?).

I did a bunch of research on topic before we filed in April, and got comfortable with no action other than the standard Ch 7 proceedings, but now this forum has me thinking!

Anyone done this?

Thanks for any advice.

[despritfreya]

You do not need to file a Complaint. The bankruptcy unit of the IRS (Special Procedures) understands the "rules". However, while the taxes may meet the test for dischargeability (I will assume you are correct that they do), the IRS has a lien. The IRS is secured up to the value of your unencumbered property as of the Petition date.

When I handle a case such as yours I send out what I call a "45 day letter" (my term). I include a copy of Schedule A and B and ask for a written confirmation that the remaining tax debt will only be up to the value of the property that is otherwise not encumbered. I then work out a payment plan between my client and the IRS for the "secured" portion of the cliam. Works every time.

[biotechsolution]

I am pro se no asset Chapter 7. So far so good - 60 days will be up soon with no objections or anything untoward that I can see. My husband is filing jointly and has substantial taxes owed that are technically dischargeable as we meet all the criteria. We have confirmed this with a very reputable tax/bk lawyer.

Should we file a complaint to determine the dischargeability, or simply leave it and assume it will be discharged? The lawyer advised we did not need to file the complaint, but I am worried and would like finality of knowing or at least being able to discuss it in front of a judge! If we do not file now and the IRS later asserts that the debts were not discharged, can I return to the court to determine dischargability, or is this my one time to do that?

The IRS did file a Lien, but we have no assets of any worth. Should we take the time to motion to waive the lien (or whatever the right term is?).

I did a bunch of research on topic before we filed in April, and got comfortable with no action other than the standard Ch 7 proceedings, but now this forum has me thinking!

Anyone done this?

Thanks for any advice.

Since the IRS lien attaches to all pre-petition property without exemptions any property with value will be game. If you really don't have any assets listed has exemptions in your filing, include cars. Offer the IRS $500-1000 to release the lien and it should be accepted.

However if your husband has either a 401k or IRA these are not exempt from an IRS levy post-petition because these assets are excluded from the bankruptcy.
The IRS will levy a 401k or IRA account if you owe taxes.

[limabean]

Thanks for the advice ... one further question re the 401K situation, as I do have a 401K of some size.

My husband and I filed BK jointly. But the taxes are his (married filing separately or pre-marriage) and the 401K is mine. Community property state, though (CA).

Any idea if the lien can be attached/levied on 'my' 401K? Or will they likely go for the offer of release for $500-1,000?

Perhaps I should just send a '45 day letter' complete with a low-ball offer for releasing the lien and see what happens? Will I stir the hornet's nest?

Thanks again! I do love this forum!

[despritfreya]

In response to:

"Perhaps I should just send a '45 day letter' complete with a low-ball offer for releasing the lien and see what happens?"

There is no harm in trying. Either the taxes will be discharged but for the "agreed" lien amount or they won't. As to the 401K, I do not know if the IRS will claim an interset in yours. As one poster indicated, the retirement plan is not an asset of the bk therefore, while the IRS may agree to a payout based upon the value of the personal property in the bk, it may not actually release the lien. The only way to find out is to contact the IRS and work a deal without mentioning the retirement plan. If the lien is released upon payment of the agreed amount you will have your answer.