Not too familiar with Ch. 13, and have ??'s

[Estabinki]

Good Morning All~

I will be filing Ch. 7 in about a month or so, and have become very knowledgable through this site, and from my attorney.

But my fiance and I have been talking about him filing Ch. 13.
He has not filed his federal or state taxes for the last 5-6 years. And we know he owes a lot of money...probably somewhere in the ballpark of $50-60K.
Can he file Ch. 13 for his taxes owed? He makes over the median for our state in order to file Ch. 7.
How does a Ch. 13 work? Can you include all of your debt in Ch. 13? Like CC, car loans, etc.? He (we) do not own a house, and really have no assets.
Right now he has 2 car loans in his name, my car and his. Is it possible to stop paying on my car loan (he keep his car)? How would that work?
If he included his CC's etc in the Ch. 13, would he stop paying the payments on them? Cause with me filing Ch. 7, I stopped paying on my cards a few months ago.
Any help, insight, advice would be wonderful!
Thanks so much!

[rrockinggramma]

He needs to talk to an attorney. The question is with that much IRS debt which would have to be paid at 100 percent, could he afford the monthly payments? It definitel would keep the IRS off his back and prevent them from garnishing and filing leins. He can include the vehicles but my attorny told me that I am only 1 person and could only claim 1 car. You might run into an issue there if both are in his name only.

[Estabinki]

Thanks rrockinggramma!
Why would it have to be paid at 100%? I thought they determine what you make, minus your expenses, and then figure out what you have left to determine our monthly payments, and then you only can pay on that for a maximum of 5 years?
What do you think the monthly payment would be?
Thanks again!

[rrockinggramma]

The IRS debt is priority debt. No deals there. 100 percent payback. But no interest charges and no penalty fees and no IRS leins.

[Estabinki]

Dang! Well I guess its time to move to Mexico...jk.
Thanks for the insight!

[jwbbx]

Estabinki,
I have faced that kind of IRS situation before. About 15 years ago I worked overseas for 6 years and didn't file. Had a real mess when I came back. I have a couple of suggestions for you.
One, know that the IRS has probably filed returns for him that include no withholding amounts or credits of any kind. (Isn't that sweet of them??). This is where they get those big estimates from. They do this based on the gross wages they see on W2s and 1099s, they just totally ignore the withholding part of the W2. (Bless their little hearts!) This means that sometimes the liability isn't as great as it seems up front, but the penalties and interest make it grow quickly. (Penalties max out, but its a very high max)

Two. Try to find an ENROLLED AGENT to represent him. These are people that used to work for the IRS and know the system. Most people turn to CPAs or lawyers, but only Enrolled Agents are required to take tests to demonstrate to the IRS their competence. There are a lot of accountants and lawyers around who will tell you they know what's what, but I found it better to work with a guy who actually had some contacts in the agency. I would give you mine but he's passed away now - finding him was what what turned things around for me. I think there is an association or something - I'd just Google it and see if there are any in your area.

Three. The first thing my EA did was ignore what I told him and went to the IRS to see what their records said. He found out what they 'had' on me, and what they expected to see, and we addressed it from that perspective rather than me trying to reconstruct the years I'd missed. It really worked out that way, I actually didn't have to go back as far as I thought I would.

Four. I got on a payment plan with the IRS that the EA negotiated that was really quite reasonable. It took a few years, but I had no BK and they didn't make me go on subsistence living levels - in fact they never really did any budgeting or anything with me. The EA proposed, they accepted and that was it. They even released their liens early.

That was my experience, YMMV but believe me the EA was WELL worth his fee!

PS: Don't fall for these TV ads about 'We Can Negotiate Your Taxes Away'. If you're tempted, then first read up about IRS 'Offers In Compromise' - that's what they're talking about. Basically the IRS will settle (less than 1% of cases) for a lesser amount. They DON'T have to do this, and it's not not as common as the lawyers want you to think. You'll find several warnings about that on the IRS site, and remember the IRS definition of hardship is probably not the same as yours! If they smell money in the future, the OIC is not an option. They'll wait - they have all the power and they know it.

[Estabinki]

Wow! Thank you so much jwbbx!!
That is a wealth of info.
Yes the IRS has already filed his returns for the years he has not filed. We had an accountant do 2 of those years, and he did say they were right on with what he owed. He doesn't really have any assets, or such.
I will try to find an EA. So just go to Google and type in Enrolled Agent, for my area?
Can I ask what your EA charged you?
P.S. We definitely know not to fall for those TV ads. We actually laugh when they come on. He had an aunt a few years ago, that went to one, and ended up taking like $5k, and never did anything for their tax problem.
Thank you again for all your help!

[MajorMike]

Why didn't he file at all is my question. He could of avoided all these fees. Isn't this tax evasion?? If not, what is ( out of curiousity )? Found this which I found interesting, to say the least:

http://answers.yahoo.com/question/index?qid=20070410071530AAFAhcL

[lrprn]

Why didn't he file at all is my question. He could of avoided all these fees. Isn't this tax evasion?? If not, what is ( out of curiousity )?

MM, this is a good example of how you "poke the bear" when you ask a member a very personal question that is really none of your business, then follow it up with accusations of possible wrong-doing (and btw, this is not tax evasion which typically involves illegal activities undertaken by the taxpayer to escape paying taxes).

Quite frankly it doesn't matter at all at this point why he chose not to file his taxes for six years. He's in the hole and is now trying to figure out how to fix the situation. That's what matters and that's where the focus of our answers needs to be.

How would you feel if I asked you, "Why weren't you smart enough to manage your money better so you wouldn't have to file Ch 13?" Get the point? Think before you post! Nuf' said.

[jwbbx]

Sorry Estabinki,
Didn't see your question until today. This all happened back around 1992 and truthfully I don't remember the fees and such.

I think his fee was about $75/hour. I had to give him a 10 hour retainer up front. All told I think I paid him about $1200 but as I said I thought it was well worth it.

Considering the IRS had over 40k in liens out against me (WAY more than I ended up owing and paying) he did a great job!

[Flamingo]

MM, this is a good example of how you "poke the bear" when you ask a member a very personal question that is really none of your business, then follow it up with accusations of possible wrong-doing (and btw, this is not tax evasion which typically involves illegal activities undertaken by the taxpayer to escape paying taxes).

Quite frankly it doesn't matter at all at this point why he chose not to file his taxes for six years. He's in the hole and is now trying to figure out how to fix the situation. That's what matters and that's where the focus of our answers needs to be.

How would you feel if I asked you, "Why weren't you smart enough to manage your money better so you wouldn't have to file Ch 13?" Get the point? Think before you post! Nuf' said.

Great post lrprn....what you state above in your last paragraph is exactly what goes on in unmonitored forums where troll posters lie in wait for someone to post and then they attack them for filing BK, not filing taxes or not breathing correctly. Everyone who posts on here needs to be thankful for this well monitored forum and the marvelous experience and advice on here.

[southernbelle]

He needs to talk to an attorney. The question is with that much IRS debt which would have to be paid at 100 percent, could he afford the monthly payments? It definitel would keep the IRS off his back and prevent them from garnishing and filing leins. He can include the vehicles but my attorny told me that I am only 1 person and could only claim 1 car. You might run into an issue there if both are in his name only.

I know I'm a little late on this one, but I have one question. I'm sure everyone here knows I have a similar situation with the IRS and just posted a separate thread, but rrockinggramma, is it true the money owed has to be repaid 100% because in my case about 50% is taxes and interest and about 50% is penalties according to their claim filed for my chapter 7.

I could be 100% wrong on this one, but if they require it to be paid back at 100%, why don't they just lump their claim together and list it as 100% priority?

I'm just curious and trying to get this one straight as well and will ask my atty. soon, but didn't want to jump the gun since I'm still in the midst of my chapter 7. Thanks again guys.

[southernbelle]

And by the way, thanks lrprn, the moderators on this forum that help to maintain its integrity is why I love it. You guys are awesome.

[cso5@]

I didn't file for several years -- if anyone cares to know -- it was because I changed my withholding allowances so that no taxes were taken out to give me the most money per paycheck, to try to stay up with all my bills. Dumb strategy, I know. Then when it came time to file that first year, I was all -- I owe HOW MUCH??? Then I just didn't file. And that went on for 3? years.

So finally upon filing for 13, I had to do all my taxes. Had to find all the tax stuff, and do all the forms. And there had been letters and such from both the state and the IRS.

So, yes -- there are 2 components to this debt -- the actual tax I owe, and then the interest and penalties. 4 components, I guess, because there is federal tax, federal interest and penalties, state tax, and state interest and penalties.

It's all sorted out now, and I file my taxes regularly, with the proper withholding taken out throughout the year -- the interest and penalties are unsecured claims and the actual tax amount is a priority claim to be paid at 100%.

What a mess I managed to get myself into, though! Scary. What a lot of good lessons learned through this whole experience.