IRS collecting even though they did not file a claim in CH 13.

[BigJohn]

When we filed for Bankruptcy chapter 13, the IRS did not file any claims. They were notified that I might be personally responsible for past 941 corporate taxes.

After we filed Bankruptcy, The IRS did tried collecting the tax with the business but all they found was a closed business.

It should be noted that we filed Chapter 13 the first part of 2009.


Strange, the IRS claims our Bankruptcy Chapter 13 case was closed in 11/2009 which corresponds with the last date they could file a claim.


Being we are in an active CH13, and being the IRS did not file any claims against us, I don't think they can pursue the matter with me personally. Is this true?

We wanteds to pay this debt within the plan, but for some reason the IRS was against this.

Comments?

[Flamingo]

I don't believe the IRS needs to file a claim for taxes owed in a Chapter 13 bankruptcy. They didn't in ours but they were included in our plan for taxes owed for the year prior to filing. When we sent in our tax forms, both state and federal, no payment was included and a copy of the bankruptcy filing form on top of the taxes (per our attorney's instructions) and we just waited to hear from them and turned over all correspondence from them to the attorney. I would discuss your matter fully with your attorney.

[esmith1515]

We had a similar situation with our Chap 13. We included some back taxes in the plan but we accumulated some IRS and state tax debt during our 4-year plan and they let us set up payment arrangements while we were still in the plan even though I had read that they may not allow us to do that. Once our plan ended in June of 08 then we bumped up our payments and got them paid off. We actually just bought a house and used our first time home-buyer credit to pay off the last few thousand we owed to the Feds.

[Skipper]

I don't believe the IRS needs to file a claim for taxes owed in a Chapter 13 bankruptcy. They didn't in ours but they were included in our plan for taxes owed for the year prior to filing. When we sent in our tax forms, both state and federal, no payment was included and a copy of the bankruptcy filing form on top of the taxes (per our attorney's instructions) and we just waited to hear from them and turned over all correspondence from them to the attorney. I would discuss your matter fully with your attorney.

Hi Flamingo,

I hope you don't mind a question; what would happen to a future federal tax refund, should one be due, if delinquent taxes are being paid in a Chapter 13? Will the IRS take the refund and apply it towards what is owed?

Thanks in advance for your time.

Skipper

[HHM]

When we filed for Bankruptcy chapter 13, the IRS did not file any claims. They were notified that I might be personally responsible for past 941 corporate taxes.

After we filed Bankruptcy, The IRS did tried collecting the tax with the business but all they found was a closed business.

It should be noted that we filed Chapter 13 the first part of 2009.


Strange, the IRS claims our Bankruptcy Chapter 13 case was closed in 11/2009 which corresponds with the last date they could file a claim.


Being we are in an active CH13, and being the IRS did not file any claims against us, I don't think they can pursue the matter with me personally. Is this true?

We wanteds to pay this debt within the plan, but for some reason the IRS was against this.

Comments?

If this is 941 tax, you are screwed and either you, or your attorney royally screwed this up.

Here is the thing...941 taxes are "first" a corporate (or business liability). However, the IRS has the option to assess the owners (or responsible parties) with what is known as the Trust Fund Recovery Penalty (basically, the principal tax owed minus the employers contribution to SS). In any event, THESE TAXES ARE NON-DISCHARGEABLE. And , in your chapter 13, the IRS has the option to go after the business, the business entity is not protected by the chapter 13. Until the IRS assesses you personally, there is not debt against your social security number (hence, why no proof of claim filed), however, because it is a non-dischargeable debt, they can assess any time within the statute of limitation (I think it is 3 years, but I could be wrong).

Here is what you are SUPPOSED TO DO. File your chapter 13, YOU file a proof of claim on behalf of the IRS, then file a 505 motion for determination of tax liability, that is, allow the IRS to assess the Trust Fund Recovery Penalty. The TFRP is a priority debt under BK code 507, so it gets paid first.

If you do not pay the TFRP in the plan, the IRS can resume collection against you after your case is discharged (with interest).

[BigJohn]

I did tell my lawyer the 941 taxes had to be paid. My lawyer indicates he wanted to pay this in the plan but the IRS, for whatever reason, didn't want to.

[Flamingo]

Hi Flamingo,

I hope you don't mind a question; what would happen to a future federal tax refund, should one be due, if delinquent taxes are being paid in a Chapter 13? Will the IRS take the refund and apply it towards what is owed?

Thanks in advance for your time.

Skipper

Unless your attorney instructs you otherwise, if you receive a tax refund in a Chapter 13 (doesn't matter if you are paying deliquent taxes or not in your Plan), you need to report it to your attorney inasmuch as the refund are additional funds received during your plan which could be distributed additionally to creditors over and above what they receive in your Plan.

[HHM]

I did tell my lawyer the 941 taxes had to be paid. My lawyer indicates he wanted to pay this in the plan but the IRS, for whatever reason, didn't want to.

That is unfortunate BigJohn, I would get in touch with your attorney and let him know the information I shared with you about how to do this.

The debtor can file Proof's of Claim on behalf of a creditors. At this point, you will probably need a Motion to Late File Claim and then follow the above plan.