Desperately need some advise with claim-Taxes

[ruggal]

I am seven months into my Chapter 13, and the deadline for proof of claims for governmental agencies has passed.

I owe trust fund taxes as part of a business that were listed in the petition, and the state did not file their claim, although they are continuing to add penalties and interest since the filing in early May. The were notified by the court, and myself in writing, so they are certainly aware of the situation.

I spoke with my attorney yesterday, and he said we have two options.

#1 do nothing and pay outside the plan-that seems WAY wrong and risky in my mind, particularly since they've added over $1600to a $4500 bill since filing, and threatened to seize my accounts as of late September.

#2 file a claim on their behalf for the amount in our petition, and let the trustee pay them, which seems right, but makes me think since trust fund taxes aren't discharged in a BK (right?), they could still be acruing penalties over the next 36 mos or so, and I would owe more than I do already when I'm done.

My attorney won't make a recommendation on which of the two options to choose, and that in itself has me concerned. I honestly don't think he's well enough versed in the tax issue to make the call.

So, although I am leaning toward option number two does ANYONE know what the BK rules are regarding trust taxes and discharge. I need to make a decision soon.

Thanks in advance for any help.

[krielly]

It seems like your attorney should be contacting the tax dept.
Since you filed a claim, you have done what you should be doing. Because this debt is non-dischargeable, it should be paid 100% through your plan as a priority debt. It doesn't make any sense to pay them outside the plan, as they will be paid within the plan once they file a proof of claim.

We have been in a 13 for 26 mos now. We had both state & federal withholding taxes for my husband's previous business included. Initially, the IRS was still sending notices, until our attorney contacted someone within the IRS. That has since been rectified.
As far as the state claim goes, our State has still not filed a proof of claim - and we are 26 mos into the plan. The trustee has "set aside" the $672 for the State taxes, as he says "the state is ALWAYS late on filing a claim". He doesn't seem concerned.

As soon as this gets straightened out.........(and your attorney should be taking the lead on this one), interest and penalties incurred AFTER you filed should be backed out. You should only be liable for interest and penalties assessed up until the filing date.

I would call your attorney again, and be firm........

K

[ruggal]

Thanks for the quick reply. I guess the fact that the attorney even suggested paying it outside the plan threw me for a loop. I have serious concerns about him based on that suggestion alone.

If I may ask, what happens if the state never files their claim? OR if they eventually do, and it's way over what we filed, how do we get the subsequent penalties removed? I don't understand why the state is given such a "pass" for filing the claims. I get the feeling like my attorney just doesn't want to fight for me, and it's a little frustrating.

OH, and he mentioned I'm not in a "sweet" 36 month plan like he initially told me. And I am quoting..."sweet, you got 36 months". Now he's backtracking to NO WAY, I always told you it was a 10%payback, nothing less. The confirmation I received from the court listed 25 payments at $500, 11 payments at $913 (car will be paid off). I guess those $913 payments will extend for 7 more months.

Needless to say, not a good day yesterday.

[krielly]

Have you ever spoken to your trustee? Is he "approachable"? Cause it seems as though he could possibly answer some of your questions.........particularly the one about "what happens if they don't file a claim".

My attorney is all over the place. think he has ADHD........sometimes he's quick to respond to a question, other times I have to send repeated emails over and over again. Lately I've started to cc my trustee on email questions. Coincidentally, I seem to get a quicker response from the atty, and sometimes the trustee just answers......

Granted, trustees won't give you legal advice, but should be able to answer some of the basic "what if" questions you have.

Hey you guys...........chime in here any time......I'm certainly no expert here........................

PS: I agree..........your attorney suggesting you pay outside of the plan seems VERY VERY strange to me.............

[ruggal]

The trustee has a person "assigned" to my case. That was a great idea, I'll give her a call with the "what if" and see what she has to say.

I really appreciate you helping, thanks so much.

[Granny]

Please come back and post what you find out from the trustee. I need this info too, except not for the state, but for IRS trust fund taxes.

[lrprn]

The trustee has a person "assigned" to my case. That was a great idea, I'll give her a call with the "what if" and see what she has to say.

Don't be surprised if the response you get is to call your lawyer. Trustees typically won't get between you and your lawyer.

[ruggal]

The trustees office returned the call, unfortunately I missed it, and I had to leave another message.

I am expecting the "call your lawyer" response, but hoping ;) I can extract a little more information from her. My plan was to ask: "what does the trustee do when the state doesn't file the priority claim?" and take it from there. I am guessing this will not be the first time they've dealt with this, and she may be able to shed some light.

Granny, I've read the IRS tends to be on top of these things...the State of Illinois is a whole 'nother story.

[ruggal]

The trustees office called back yesterday, and said that their experience is the IRS is on the ball with filing their claims.

Regarding my issue, the taxes will NOT be discharged, which we already knew. That in order for us to file a claim on behalf of the state, we would have to petition the court to allow us to file the claim, since the claims time limit has expired.

I voiced my concern over the ability of the State to continue (as they already have) to add penalties and interest, and my $4500 liability would be $20,000 at the end of the bankruptcy. She said they're not SUPPOSED to do that, but that didn't mean they WOULDN'T.

Since my attorney won't advise me on this...I am going to be contacting a tax attorney to see what he thinks I should do. My BK attorney, is not a lot of help on this one.

[krielly]

Let us know how you make out........