Chapter 13 and the I.R.S.

[Derick]

I have filed for chapter 13 (this is the second time due to a loan mod on my home and won't get into it now) due to owing the IRS about $24000 and CC bills of $90k, not to mention my second mortgage has been stripped. We started paying our trustee payment 7 months ago. Today I get a call from my BK attorney telling me our new trustee payment will be $250.00 more a month because of the IRS. I told him we could not afford that and what can we do? His response was;

My questions are; should I consider hiring a tax lawyer to try and negotiate what we owe the IRS and is it true that nothing that can be done at this point?

Thanks!!

[SMinGA]

I know nothing about the tax angle - but it sounds like your actual amount owed on the taxes is more than originally anticipated.

To be feasible your plan must be able to pay all priority debts within 60 months. Priority debts would include things like taxes, mortgage arrears, secured loans, atty fees. Maybe others but that is what I can think of at the moment. Some of that may get interest also, and a % of your payment (5-10% depending on the district) goes to the trustee. If you can't pay enough to resolve it all in 60 months, you will have to find a way to pay enough or have the plan dismissed and try some other avenue.

[BKchapter13]

as far as taxes.. you need to talk to an attorney that specializes in taxes.

[justbroke]

It would be interesting to be in a Chapter 13 and be able to do an OIC (offer in compromise). First, the "penalties" and interest on the penalty is "already" stripped (turned into general unsecured) because of the Chapter 13. This means, you're only paying your actual tax liability and the interest on it.

The key will be, just how old is this $24,000 tax debt? Would the IRS be willing to do an OIC while you're in a Chapter 13 plan?

You should check to see what the IRS filed as a claim. Check the "priority unsecured" amount and that would be what you "must" payback during the Chapter 13. The general unsecured amount is dischargeable.

The $24,000 alone is $400/month over 60 months. Is your disposable monthly income (DMI) on Form B22C (the means test) already negative? If it's not negative, I don't understand how you can not afford it.

[car67]

You cannot do offer in comp for taxes in Chapt 13 Already tried that angle... You will need to either pay the IRS via the 13 over 60 months and this means your credit cards get zero..... Or you dismiss the Chapt 13 and settle the debt with credit cards direct and contact the IRS to do the offer or if your income is low enough the IRS will move your file to non collectable for 10 years and if you ever get a settlement or chunk of cash or Tax refund during the 10 years the IRS will be waiting with hands out. You will file every 2 years a statement of finances and if your income increases in the 10 years by matching tax returns from previous years the IRS will come calling I got a excellent referral from a guy who handles these tax cases and is a ex IRS agent and he now helps people settle tax debt and he is based in Washington state//// Send me PM for refferral info.. He came highly recommended by my bankruptcy attorney!

[justbroke]

Great information Car67.

[Derick]

Thanks for the replies.
Our DMI will be negative if the new payment actually goes through and then we will not qualify for 13. Which means I have paid my BK lawyer $6,000 to file for me 2x and still nothing.

The tax years we owe for are from 2002 and 2003. We were on a payment plan for a couple years.

[Derick]

How much could actually be negotiate with the IRS?

[Derick]

one more question if you don't mind;

I saw apost earlier about Ch 13 and the IRS and something about a 3 year rule. Does anyone have any idea where I can find this again, please?

[joek]

the IRS added general unsecured to my total and my attorney objected and got it turned. Might want to make sure the general unsecured isnt added in the total due to the IRS. As just broke stated, 24,000 is 400 a month. That was my payment and amount owed(including the general unsecured). After the objection and the general unsecured removed the total dropped,owed to the IRS. My payment wasnt lowered but i did complete my plan a year early.

[lrprn]

I saw apost earlier about Ch 13 and the IRS and something about a 3 year rule. Does anyone have any idea where I can find this again, please?

Basically any income taxes that were filed on time three years or more before filing can be discharged. See http://www.alperlaw.com/taxes_and_bankruptcy.html and http://www.moranlaw.net/taxes.htm

[Derick]

Great thanks!!