State Tax Lien in Chapter 13 Post Confirmation

[ruggal]

My saga with the state, and soon, my attorney has taken a new twist. Yesterday in the mail, I received a notice that a tax lien had been filed in the county office.

This is for Trust Fund taxes listed in my Chapter 13 (filed May 07), for which the state did not file claim. Keep in mind, I notified the state office myself right after the BK was filed, the BK court notified them, and I notified them again in writing with a file number (they were harassing me in September). In November my attorney notified them AGAIN in writing. That's a four notices!

I realize this is a violation of the automatic stay, I am just a bit peeved that the attorney did NOT take care of this back in January, after the deadline had passed.

How hard will the lien be to remove NOW? I am very afraid the next step is to sieze my bank accounts, which apparently they CAN do. Should I notifiy my bank of the BK?

I DO NOT TRUST ANYTHING THIS STATE DOES. I am tempted to notify the state myself, but hesitate since my attorney is supposed to be the one to communicate with them. Did I mention they've added $2000 in penalties and interest since I filed on a $4300 tax bill? I sent him notification of this yesterday evening, it'll be interesting to hear his response.

[krielly]

Forgive my ignorance, but what exactly are trust fund taxes.

We also had an issue with the State taxes. Witholding taxes for when my husband had an employee.

We filed our 13 in October 05. The state was sent notice with all the other creditors, but never filed a proof of claim. So, money was set aside in the plan, as has sat for 2 1/2 years now - waiting for them to file. The trustee's office contacted them a couple months ago, and they stated "no tax liability".

Now........we know better, as we have been getting notices and I was concerned that after the plan, they would try to come after us for the $. Definitely don't want this to happen, as the money is just sitting there waiting for them to file a proof of claim.

Long story short, the trustee emailed a contact at the tax department and this was the story:

Because the witholding taxes were technically under my Husband's business name (which was an LLC) the state's position was that there was no determination yet of personal liability. Therefore, my husband PERSONALLY had no liability, ergo, they could not file a proof of claim in our personal Chapter 13 BK. What we ended up doing is writing a letter to the state tax department with my husband stating he acknowleges personal liablilty for this debt. Once they received that, the state filed their proof of claim, and now can be paid through the 13.

The interesting thing here is we had Federal witholding taxes we included in the plan as well. The IRS never made any distinction between personal/business, and filed their proof of claim.

Hopefully your situation can be easily resolved. I know that in our case, the principal and interest portion of the claim was considered secured, and the penalties portion was listed as unsecured, so both state/federal are only getting a percentage of the penalties paid in the plan.

I hope this helps. Good luck!

[ruggal]

Thank you so much for the reply. I've been dealing with these jokers for over two years, and you've got the best explanation as to why they've done nothing. The state withholding and sales taxes are both "trust fund" type taxes, and cannot be discharged in BK. Our state has a 100% penalty unit, which transfers the liability to the "responsible party", or officer of a corporation (mine was an S-Corp).

I just don't want them siezing my savings account, as our property taxes are due June 1. Thanks again, I left a message for attorney this morning.

[krielly]

I hope that you are able to clear this up. I was surprised to learn how easily this was to clear up.

Please let me know what your lawyer says. Maybe you can simply write a letter acknowleging personal liabilty as well, and save all the red tape of a liability judgment.

Definitely keep us posted how this turns out!

Good Luck!
K

[ruggal]

Update

Attorney spoke with someone at the DOR, seems like a mix up and they perhaps thought it was a Chapter 7 instead of a 13. The State's notes said we filed in June, and the BK dept at the DOR thought is was okay to file the lien now?

Anyway, he hopes to have an update by Tuesday. Thanks again for your help.

[krielly]

Glad to see this is going to be sorted out!