Advice Needed

[MajorMike]

Hi Ya'll...
Can you tell me what I need to do if we just filed our taxes and owe $2400 to the IRS for 2008? We are in a BK13. Do we just let them know this and they will do an amended claim? ( they are already getting paid from a previous year within the BK)....Any advice would be appreciated! Thank you!

[BigJohn]

You can ask them to put you into a payment plan. To get into a plan does have an up front fee to get the program started.

Have you rechecked what you owe the IRS for the 100th time? Every little bit can help.

[rrockinggramma]

1st this is considered "post petition" debt so no you can't include it in the current chapter 13.

2nd the IRS will NOT do any payment plans while you are in a current chapter 13.

However they will NOT attempt to collect it either other then sending you a letter stating what you owe.

So, what I did was I sent in payments when I could and eventually got it paid down. They still charged the interest and penalties but never once contacted me about it.

Once you are discharged however, all bets are off.

[MajorMike]

What do you mean all bets are off??? Im sure I can get it paid off in a year or so..maybe sooner...but if the trustee knows I owe this to the IRS, won't that throw up a red flag? Our trustee doesn't ask for tax returns, however.

[optimistic1]

Well if he doesnt ask for them, then why worry about. Start making payments to the IRS for the debt you owe them from 2008. Dont tell the trustee anything. Im surprised they dont ask you for your returns.

[sirlostalot]

I was under the impression that Chapter 13 is beneficial to those that have tax debt to pay down in addition to wishing to keep a primary residence. So this isn't the case and you can't include tax payments in a Chapter 13 repayment plan? Referencing comment, "the IRS will NOT do any payment plans while you are in a current chapter 13." Help....what does this mean?

So it is better to strike a payment plan with the IRS BEFORE filing Chapter 13 and THEN include it? My husband has back payroll taxes and self employment income taxes that he owes and we both have secured and unsecured debt. I am trying (unsucessfully) to get a handle on which chapter is better for us to file. My attorney is pushing us to Chapter 7 but we do marginally qualify for Chapter 13. We have a DMI of average $500 for the first year of a plan and then could go up from there.

***We absolutely want to stay in our house but have struggled over the last couple of months to stay caught up on the mortgage (30 days late) when his business took a nose-dive. Husband now has a new job and we hope to have mtg caught up in a couple of months.

Any words of wisdom, please? Thanks.

[deerme]

I had the same situation because I was not advised to change my exemptions before my budget was set up. I called the IRS to make payment arrangements and they referred me to someone in my local area and they got the whole amount incorporated into my Ch 13. They did not even call me back with status, but when I got my 6 month statement from the Trustee it was there. It has just added a few payments onto the end of my term. Totally worth it.

But change your withholdings so you don't owe again.

Good luck!

[Flamingo]

To the OP - Rockinggramma is correct - we owed $1500 for tax year 2004 during our Plan and our attorney advised us to contact the IRS for a payment plan. Note - we included taxes owing for 2001 in our 2002 filing. The IRS will not allow you to have two repayment plans so if you have taxes included in your Chapter 13 filing, you will not be permitted to have a second "payment" plan with them. The best thing to do is file your tax return with the request for a payment plan included with it along with a check of some sort to put toward the balance. You will hear back from the IRS as to what to do and who to call. You will need to, at that time, contact someone in their BK sector. You will be asked to pay something each month toward the balance owing and in our situation, we sent in $50 per month. We let our attorney and our Trustee know about this payment but it is debt outside your Chapter 13 so it is your responsibility. You will be responsible for interest and penalties while you are paying out your 2008 taxes.

I don't know your situation but it would benefit you greatly to sit down and go over your situation for 2009 so you don't go through this again.

[optimistic1]

I was under the impression that Chapter 13 is beneficial to those that have tax debt to pay down in addition to wishing to keep a primary residence. So this isn't the case and you can't include tax payments in a Chapter 13 repayment plan? Referencing comment, "the IRS will NOT do any payment plans while you are in a current chapter 13." Help....what does this mean?

So it is better to strike a payment plan with the IRS BEFORE filing Chapter 13 and THEN include it? My husband has back payroll taxes and self employment income taxes that he owes and we both have secured and unsecured debt. I am trying (unsucessfully) to get a handle on which chapter is better for us to file. My attorney is pushing us to Chapter 7 but we do marginally qualify for Chapter 13. We have a DMI of average $500 for the first year of a plan and then could go up from there.

***We absolutely want to stay in our house but have struggled over the last couple of months to stay caught up on the mortgage (30 days late) when his business took a nose-dive. Husband now has a new job and we hope to have mtg caught up in a couple of months.

Any words of wisdom, please? Thanks.

1. You cannot add post petition (filing) incurred debts, including IRS tax obligations. So if you end up owing taxes, you need to pay them accordingly, so start sending them monthly checks to pay it down. You cant add them into your current Chapter 13 plan. Owed taxes, prior to filing, can be included in to the plan.

2. Most attorneys want you to file Ch.7, its easier for them, and you pay them all of the fees up front. Second, I dont see how you even qualify for a Chapter 7 if you have DMI of $500.

3. My advise is, if you really want to do a Chapter 13, and your attorney disagrees, talk to him. His thinking is, that if you get a discharge from the Chapter 7 unsecured, then when its over, the money you then have extra each month, you then catch up yourself for the taxes and mortgage arrears.

I would do just as he is advising you if I could, unfortunately, I filed a Chapter 7 in 2004, so I cant until 2012, but I can do a 13, and get protection nonetheless.

[sirlostalot]

Thanks for the advice, Optimistic. I will try and be more open minded about this chapter business- particularly since I did pay my attorney $3k for his expertise. I just feel like he is taking the "path of least resistence" somehow and overlooking the house and taxes with a beeline to chapter 7. We need bankruptcy protection but I don't want to lose my house. I don't know how he is figuring it but if my husband stops working his business and side jobs then, yes, maybe we would fall to the negative but I don't see the point.

My husband is meeting w/IRS/state next week to discuss, file forms, and make arrangements as appropriate. He owes quite a bit in taxes so I hope it can be worked out in BK. I guess they can take everything but our smiles and the clothes on our backs. I am pretty scared, really. I NEED to keep my house with a bedroom for my son to come home to from college and my dogs ...they can have everything else I own...which isn't much :-).

[lrprn]

MM, you have excellent advice from others already.

All I'll add is that you need to let your lawyer know about the owed taxes so he/she can tell your trustee. It's possible your lawyer might be able to convince your trustee to allow you to skip a Ch 13 payment or two to pay the taxes down instead. You never know.