In an active 13, and have a 2010 tax bill for over 2k...do I have options?

[espo1357]

Specifically, can I modify my Chapter 13 (about a year in), and now include the new IRS tax money I owe?

Or should I just get into an installment agreement with the IRS and not go there (assuming that I can modify my plan)?

Thanks folks!

[despritfreya]

It can go either way. How much do you owe?

1. If the amount is not too much, ask for a waiver of Plan payments to allow you to pay the tax on your own. Your Plan payments will have to increase slightly once you resume to make up for the missed payments.

OR

2. The IRS can file a "1305 claim" which is basically an amended Proof of Claim to include post petition taxes. If and when that happens the Trustee will require you to modify your Plan to provide payment. If you want to push towards this approach you (or your attorney if you have one) may want to contact Special Procedures (the bk arm of the IRS) and ask that such a claim be filed so that you can modify the Plan accordingly.

Change your withholding. A one time problem such as this is not a big deal, but failing to pay taxes as they come due is grounds to dismiss the case. You do not want this to happen again.

Des.

[espo1357]

It can go either way. How much do you owe?

1. If the amount is not too much, ask for a waiver of Plan payments to allow you to pay the tax on your own. Your Plan payments will have to increase slightly once you resume to make up for the missed payments.

OR

2. The IRS can file a "1305 claim" which is basically an amended Proof of Claim to include post petition taxes. If and when that happens the Trustee will require you to modify your Plan to provide payment. If you want to push towards this approach you (or your attorney if you have one) may want to contact Special Procedures (the bk arm of the IRS) and ask that such a claim be filed so that you can modify the Plan accordingly.

Change your withholding. A one time problem such as this is not a big deal, but failing to pay taxes as they come due is grounds to dismiss the case. You do not want this to happen again.

Des.

About 2k. I was just going to do an installment agreement with the IRS. Then, I thought, it might be better to modify my current chapter 13, as the unsecured are getting about 25 percent.

Maybe its best just to pay it outside the plan, and not open up a can of worms?

[justbroke]

When did you file, in 2010? Sometimes, it's easy to amend the plan and include taxes for the year in which you filed; since you wouldn't have made the adjustments that Des suggests. I would certainly make sure that I'm not in that position in the future.

Looks like there's something wrong with either your witholding, what you put on Form B22C for taxes, or there was a change in your liabilities. In either case, rework the numbers and work with your attorney. Don't let those taxes bite you in the rear! A condition of staying in a Chapter 13, is paying your taxes and not having tax issues.

[despritfreya]

Maybe its best just to pay it outside the plan, and not open up a can of worms?

It is not a "can of worms". You just have to decide what works best for you.

Des.

[jetsfan2010]

I am in the same boat, as my plan just got confirmed last week, but I also see that I now owe roughly 1300 for this year. I rather set up an installment plan and have it done by the end of this year though than modify the plan.

[espo1357]

I am in the same boat, as my plan just got confirmed last week, but I also see that I now owe roughly 1300 for this year. I rather set up an installment plan and have it done by the end of this year though than modify the plan.

Ya, I am going the installment route too. Opening up a can with BK 13 doesn't seem safe. LOL.

[steveok]

i'll be in the same boat...filed end of September and will probably do the installment plan...How big of a hassle is it to set it up with the IRS?

[Cristo]

I am in the same boat, filed in July 2010 and owe about $4000. My attorney told me that trying to get it in the plan would open up a can of worms and would be almost like starting over. Or, maybe he just didn't want to do it. Either way, if you are allowed to have an installment plan with the IRS then I will do that. I was on an installment plan before I filed for 2008 taxes and it is no problem to set up if you owe less than $25,000. You can do it online.

I was off on my taxes because I got a modification on my mortgage and my mortgage interest deduction is now less. I also had to take some money out of my retirement last year and the extra income was apparently just enough to push me into a higher tax bracket. I have since upped my witholding so this does not happen again.

[espo1357]

i'll be in the same boat...filed end of September and will probably do the installment plan...How big of a hassle is it to set it up with the IRS?

Easy to set up, and it is reasonable.

[stratos]

What about taxes that are due in April of this year. If you file before April, can you include the 2010 tax debt in a ch. 13 plan?

[espo1357]

What about taxes that are due in April of this year. If you file before April, can you include the 2010 tax debt in a ch. 13 plan?

Yes, in a chapter 13, you add the taxes you owe before you file. This amount gets paid before all other claims.

[spidge]

About 2k. I was just going to do an installment agreement with the IRS. Then, I thought, it might be better to modify my current chapter 13, as the unsecured are getting about 25 percent.

Maybe its best just to pay it outside the plan, and not open up a can of worms?

If your Ch13 payment is based on your available funds(budget) wouldn't the newly owed tax take up some of that 25% payback reducing it by the amount of the taxes owed. This would cause your trustee payment to stay the same and you would not have to pay anymore out.
I am in a similar position but my payback is 3% (goes to attorney and trustee) so my trustee payment will certainly go up. We will find a way to pay it outside the plan if we can.

[1dayatatime]

Interesting. Our chapter 13 Trustee required us to surrender a rental property because we were cash flow negative by about $100 per month. The HELOC was stripped as unsecured, the stay was lifted and foreclosure ensued in 2010 (we filed in 2009). I received a 1099-A which I included in my package to our CPA to prepare tax returns for 2010. The FMV and the loan balance were identical. Yesterday, I got the returns from the CPA with a balance owed to the IRS of just over $7K. I had expected to owe about $2K. The apparent reason for the remarkable increase was found on schedule D and on form 4797 which showed a capital gain of over $37K! I will certainly be contacting my BK attorney and my CPA tomorrow, however, I thought y'all might be interested in this development. Since we have done everything we can to hoard money since filing, we can pay this bill, if we have to, without modification. However, it would seem that a modified BK payment might be in order.

[justbroke]

I didn't have that issue, but it's from the recaptured depreciation! A nasty thing for investors, like you and I, who go bankrupt. (Or your CPA messed up with your adjusted cost basis. Don't ask me because I'm not a tax expert and I messed up my own 1099-A!)