IRS debt and possible seizure of land

[katt3344]

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I will try to keep this simple, although if it were just that, I wouldnt be posting on here.

First, lets address the possible land seizure issue. Im filing ch 7 in the middle district of FL. I turned in the last of my necessary docs last week. My atty called me with some questions. So heres the deal. My home sits on 5-acres and i also own the 5-acres adjacent to me. And while the two lots are actually deeded separately and recorded separately at the tax collectors office, it was all sold to me as one. So i have one mortgage for all of it. And the mortgage does not denote a specific price for each piece of property. It is also owner financed so its between me and the prior owner, no bank is involved. I am being told by my atty that because the vacant lot next to me is not exempt, theres a strong possibility the trustee will seize it as an asset. I know it depends on how much I owe amnd how much they think its worth, if theres any equity in it. But thats where it gets tricky. I pay one pymt a month to my lienholder for all of it. And like i said before, the mortgage itself doesnt designate how much of each pymt is allocated to each property. So my question on this is are the bk courts/trustees within their rights to say how much they think ive paid and how much i owe on each lot? Or is that strictly between me and my lienholder?

Question #2: I recently recieved a bill from the IRS for a very large sum. Its for taxes i owe from the 2011 tax year, filed in 2012. The tax is for early distribution from my 401K. I went thru a horribly messy divorce and my ex, her lawyer, and my lawyer got all of it! That being said, I never did get the 10-99 from my investment co (because i was moving around so much), and completely didnt think about it when it came time to do my taxes. Ive read on here that they can file a lien on any assets i may have and that lien survives the babkruptcy. So i know personally they wont be able to garnish my wages, but if i have equity in anything, they can file a lien against that to take it. (I dont have equity in anything right now). So my question on this is if i include this debt in my bankruptcy, can they still file a lien against me for any assets? And if so, is there a statute of limitations on that? For example, if they file a lien on my other lot, can they wait till i have equity in it or pay it off and then take it?

Any help on this would be greatly appreciated! Ive already lost everything i had in my divorcr and am trying desperately to rebuild some kind of life for myself, but i cant seem to get in fromt of this crap! Thank you!

[justbroke]

katt3344 for your first question, it has too many dependencies. I really don't like speculating about what a Trustee may or may not do. It really comes down to value. If the Trustee performs an evaluation (Broker's Price Opinion, Automated Valuation Method, Comparative Market Analysis, Full Appraisal) and finds that your claimed value (let's say $100K) is less than the BPO, AVM, CMA (let's say $200K), then the Trustee is going to object to your claim of exemption. Now that would be a very big difference!

First, I would hope that your petition listed the two pieces of land separately and put a value on them separately since they are separately deeded lots. Second, I would hope that you found a valuation that is appropriate for those parcels. Please realize that the mortgage is irrelevant to the how much each individual property is worth. How much you owe on the combined property is something that only affects the creditors claim but doesn't supersede the Trustee's ability to liquidate the non-homestead property. It would certainly be complex, but non-homestead property is not protect under the Florida Constitution (Article X Sec. 4) nor the Statutes (F.S. 222.24)... unless you're applying some wildcard, which you wouldn't have since you're claiming the homestead exemption.

For your second question I will first say that you are right to worry about an IRS Federal Tax Lien (FTL). An FTL attaches to ALL property when it is filed. I have to say that again; an FTL attaches to ALL property (even your homestead). Filing Chapter 7 will only delay the IRS. Before and/or after filing your Chapter 7, you would need to enter into a Payment Agreement (PA/OPA) with the IRS or seek an offer in compromise (OIC). If you did enter into an OPA/PA prior to filing, it would be cancelled and you'd need to redo the OPA/PA. The IRS usually doesn't file an FTL when you are in an arrangement and paying (and they feel that you are able to pay)... but they can still file an FTL for certain amounts.

I don't understand why you are second guessing your attorney. If you are just trying to see what others think about your key issues, that's fine. Your attorney should be able to tell you exactly how this will proceed and the pitfalls of both the non-homestead property and the IRS tax debt. Please realize that you are going to need to deal with the IRS sooner or later.

[katt3344]

I appreciate the response. Unfortunately, that doesnt really answer my question. I understand what you are saying about the petition listing the two pieces of land separately, but I havent seen the petition yet because they just filed it last week and I live in another county so this is all being handled by phone and email and I have yet to see a copy of what was filed. When I filled out my financial questionnaire, I listed the property value as a total value and same for the mortgage, as I wasnt aware of the two deeds until the atty contacted me and explained this. I understand its going to come down to what the property is worth and what I owe. But the issue is going to be how it is determined what i owe for that piece of land since the mortgage was for both lots together. So who get to decide what portion of my mortgage was for the vacant lot annd what portion was for the lot with the home? I would think that would be my lienholder (the current property owner as its owner financed), but having never been down this road before, I am not certain.

As to the IRS debt, it sounds like theres just no way around that. I have heard (not from my atty yet), that it may be possible for me to pay a reduced amount to the IRS due to the bankruptcy. What really sucks about this is that a large chunk of the money (the mount given to my ex), was rolled into a college savings plan for the kids. So if I had done it myself, I dont even think I would have been penalized with the taxes. But because I had to give it to her and she did that with it, I got screwed. Anyhow, what Im not certain of is how long the FTL lasts? I mean, since I dont actually own anything at this point (i have little equity in my property), if they file a lien now, can they wait until I eventually pay off the property and get the deed? I would imagine so, if I still owe the debt. As its the IRS.

[justbroke]

I think we are talking about the same thing. The court would decide what equity you have in the property after you present evidence. The lienholder would probably not even need to appear at any hearing to determine value. The keyword is value.

You really need to look at your petition, which you should have reviewed before signing and your attorney should have had you review it before signing, to see how the value is specified. I found an opinion from the Florida Attorney General concerning "contiguous" lots used as a homestead (http://www.myfloridalegal.com/ago.ns...2563BE00537086). The particular opinion was really based on land that had a right of way separating the land (a road). However, the AG opined that the other lot (on the other side of the "street") would still be homestead property. Mostly because the property tax exemption in F.S. 196.031 includes "contiguous real property".

So, I'll back up a bit because I based my prior answer on it being already determined that the lots are not continguous and are not homestead property. and say first, it depends on whether this is considered "contiguous real property". If I were in your shoes, I would have exempted BOTH pieces of land under Fla. Const. Art. X Sec. 4 using the unlimited homestead exemption. Then have the Trustee attempt to object to that exemption. (Brandies v. Perry, 22 So. 268 (Fla. 1897) seems to be on point)

Florida Constitution Article X Section 4...

a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner’s consent by reason of subsequent inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family"

(emphasis added is mine)

In fact, what do your tax invoices look like from the county? I'm sure you get two separate bills, but do both have a homestead exemption?

I usually don't get this deep into exemptions and valuations, but I think you may have put the cart (fighting value) before the horse (homestead status).

I hope this helps.