Please Help

[lntmyh]

I filed Chap 13 a few months ago mainly because I was in deep doodoo with the IRS.
My lawyer advised me that a huge amount I owed to the IRS could be filed as unsecured and I would not owe it once the bankruptcy was discharged.

So this year I file my taxes and see that I am due a refund I am not excited however because my refund is always grabbed by the IRS.
I talk with a family member who filed last year for chap 13 and she states she received her tax refund last year. I see a glimmer of hope but I dont make plans for it.

So I check status of refund and call the IRS and they tell me it is just delayed. I call back a week later to the IRS bankruptcy dept and I am told they removed a block and I should receive a paper check in 30 days.
I again will believe it when I see it.

That was jsut background here is the issue, my family member who filed chapter 13 and received her refund last year called IRS for her return and was told she should feel lucky she received anything last year.
She was also told here's where I start to get worried--That once her bankruptcy chap 13 is dismissed she will still owe the IRS as the taxes were filed on the bankruptcy as unsecured.
Is this right anyone? Could I have filed bankruptcy for the very reason of
taxes and still be liable once it is discharged? I have 37,000 on my debtor notice that was filed as unsecured. Can my lawyer get away with outright lying to me?

[ccfriend]

I don't think tax debt is dischargeable. I could be wrong though

[justbroke]

Yes, you will receive your refund. The IRS is not allowed to "withhold" your property when you have a Chapter 13 and submitted a Plan of Reorganization that deals with any back taxes. Sure, your tax file is flagged and it causes a delay in receiving any refund, but they have to send it to you. Unless... they immediately file a Motion to Setoff, they would actually be violating the automatic stay.

Could I have filed bankruptcy for the very reason of taxes and still be liable once it is discharged? I have 37,000 on my debtor notice that was filed as unsecured. Can my lawyer get away with outright lying to me?

You wouldn't be liable if the "general unsecured" portion is discharged. The IRS is not allowed to collect on that portion. However the "priority" unsecured portion is collectible and non-dischargeable if it doesn't meet the criteria to discharge taxes and/or you have filed a Complaint to Determine Dischargeability and had it granted.

You need to understand the difference between priority unsecured and general unsecured tax debt. One is not-dischargeable and the other is... respectively.

Hope that helps.

[TexasEx]

Stupid question then, how does the IRS determine which part is priority and which one is not? Do they just do a certain percent of the total debt?

[tigergem]

Stupid question then, how does the IRS determine which part is priority and which one is not? Do they just do a certain percent of the total debt?

You might want to check out this link... he explains it in a video, how to discharge your taxes. Apparently it is a timing thing.

http://www.getirshelp.com/irsblog/66/are-irs-taxes-dischargeable-in-bankruptcy/

I am not affiliated with this web site in any way, shape or form and have no clue how reliable the information is.

[justbroke]

Stupid question then, how does the IRS determine which part is priority and which one is not? Do they just do a certain percent of the total debt?

Your actual tax liability including the interest, is priority unsecured debt... if three conditions are met. They are 1.) that the tax was payable without penalty less than 3 years from filing, 2.) that the debtor filed the (required) tax return less than 2 years from filing, and/or 3.) that the tax was assessed within 270 days. Otherwise it's dischargeable.

The "general" unsecured part is the penalties and interest accumulated on the penalties. That part can be discharged.

Yes, it's a timing thing.

[tigergem]

Yeah but if they already filed a lien, the lien is not dischargeable from what I understood. Wouldn't they get around to filing a lien in that amount of time? I mean... who wants to toy around with the IRS for a year or three to find out?

[justbroke]

Yeah but if they already filed a lien, the lien is not dischargeable from what I understood.

That is correct. However, the lien would only apply to property acquired before filing your bankruptcy case. Aft acquired property may not be subject to that lien. (I'm not too clear on aft-acquired property and the affect of the lien post-petition.)

Wouldn't they get around to filing a lien in that amount of time? I mean... who wants to toy around with the IRS for a year or three to find out?

The IRS sends these Notice of Tax Lien via a computer. It's automatic. It's pretty efficient too. However, they do still need to record the "Notice of Tax Lien" as far as I know. This is also done pretty efficiently, as I believe the computer mails these out as well.

[tigergem]

Efficient? Or just plain scary? Like HAL? I mean, my notices of filing bk went to their preferred address, (insolvency department) yet when I called in response to a notice of interest assessed I received on the debt I included in my plan, they had no record of my bk at all in the system. I guess I had better keep a closer eye on this "efficiency".

[justbroke]

Like any large organization, one hand doesn't know what the other is doing! Besides, it does take quite some time to process the notices. For example, HSBC told me they were 90 days behind in processing bankruptcy notices!

[tigergem]

Yeah, I figured it was something like that. The IRS rep I talked to last week was familiar with the insolvency department and asked me (very nicely) to fax the notice of filing to ... someplace in Philadelphia... so that it could get entered into the system properly for the benefit of people who actually work at the IRS. lol. She also asked me to please file a 1040x on that adjustment, even though they already did an adjustment. I guess it's no big deal to comply with the request. I am not disputing the amount or anything. I screwed something up, and this is just that being fixed. I just found her request for a 1040X to be extremely curious on the heels of receiving a notice that the IRS had already made an adjustment to my 2008 1040.