Paying Back Taxes in a Chapter 13

[HHM]

Before I even attempt to file for CH 13 I'm wanting to contact the IRS for and OIC. Would you recommend this? I owe around $60k from 2007 and $7k from 2009. I owe the State of California $14 k which I'm on a $300/month payment plan. My DMI has come out to about $500 and over 5 years I wouldn't be able to pay the full amount to both State and Federal. Not sure if I should deal with IRS by myself or pay even more thousands for a tax attorney.

If you have DMI for BK, then you have DMI for the IRS. An OIC uses ONLY the IRS expense standards. An OIC is not just calculated based on equity in assets, but also a multiplier of your DMI (either 48 or 60 depending on which OIC payment option you use).

Thus, if you have 500 DMI, your minimum offer amount would be $24,000 + any equity in assets. And you would need to pay that in 5 payments or less.
If you opted for the 24 month OIC payment option, your OIC would be 30,000 + any equity in assets.

Also, keep in mind that the IRS acceptance rate of OIC 's is less than 25%, and while the OIC is pending (it can take up to 24 months to get an OIC decision), the clock stops on your ability to discharge the tax in BK.

[sdevine6910]

Thanks HHM. So, basically, if I'm planning to do a CH 13 it wouldn't make sense logically to do an OIC before. Just not sure how my attorney's planning to put in my BK plan the IRS, State Tax, back property tax and arrears? He seems confident this can be done with just a DMI of 500.

Also, in my expenses, I've added my second lien of $1100/mnth which apparently will be stripped because the house is worth less than the first mortgage. Do I add this to my DMI?

[HHM]

Thanks HHM. So, basically, if I'm planning to do a CH 13 it wouldn't make sense logically to do an OIC before. Just not sure how my attorney's planning to put in my BK plan the IRS, State Tax, back property tax and arrears? He seems confident this can be done with just a DMI of 500.

Also, in my expenses, I've added my second lien of $1100/mnth which apparently will be stripped because the house is worth less than the first mortgage. Do I add this to my DMI?

I agree, I don't see how he can either. If these are priority taxes (which they appear to be) and non-dischargable; then you must pay the tax in FULL within the chapter 13 plan.

[momofthree]

Thanks HHM. So, basically, if I'm planning to do a CH 13 it wouldn't make sense logically to do an OIC before. Just not sure how my attorney's planning to put in my BK plan the IRS, State Tax, back property tax and arrears? He seems confident this can be done with just a DMI of 500.

Also, in my expenses, I've added my second lien of $1100/mnth which apparently will be stripped because the house is worth less than the first mortgage. Do I add this to my DMI?

yes. If the 2nd is being stripped, then it's no longer an expense. Your dmi will be $1600 in that case--$96k over 60 months...