How to have tax debts discharged

[mawhelchel99]

I have tax debts which are over 9 years old which I am told can be discharged. I had my 1st creditors meeting, amended my EF form changing tax debts to non priority which was accepted by the clerk. The court responded with this:

The bar date for filing objections to discharge and for determination of dischargeability of debts was (or will

be) on 8/23/16.

It appears that the creditors (IRS) has until then to respond or not respond..

My question is --- is this enough to WAIT for the IRS to respond or do I need to file a motion to set up a hearing on the matter? I don't want the court to just rule without considering that the tax debt should be discharged as non priority debts. Have I done enough? The only debts I have are taxes over 9 years old.

Thanks
Michael

[justbroke]

I don't know what you mean by the court responded without knowing the actual name (or caption) of the paper that they sent you. I'm thinking it's just the Notice of Bankruptcy which includes certain dates. The date by which to file a dischargeability complaint is fixed and it is 60 days from your first scheduled meeting of creditors (Rule 4007). Every creditor, including the Trustee and United States Trustee, has until that date to say "ummm... these should not be dischargeable".

As for your tax debt, whether it is dischargeable under the 3/2/240 rule (3 years since due without penalty, 2 years since filing, and 240 days since assessed), is something that the IRS actually handles pretty well. What I'm saying is that you will know the IRS' position based on their claim which they will file soon. In my experience and from reading many outcomes on this forum, the IRS is typically a very good creditor and doesn't try to pull anything over on the debtor. I don't even think the IRS looks at how you scheduled them on the forms because their debt would either be dischargeable or not dischargeable just simply under the rules. If you have complexities, such as the IRS filed one or more Tax Liens (FTLs), then you may not be able to discharge the debt.

Again, you'll need to wait to see the IRS' position on your past due taxes. The only way is really to wait for the IRS to file a claim. You do not file any motion for this now, because the IRS has not even filed a claim (so there's nothing to argue before the court). If the IRS does come back and lists some of them as dischargeable and some as priority, then you'll need to determine if you want to fight the IRS on the "priority" non-dischargeable amounts. The IRS would be represented by a United States Attorney.

[mawhelchel99]

Ok, the IRS responded that all my tax debts around 2005-2009 were discharged. But a tax debt of 4k dating back to 2003 was not discharged and I am not sure why. It was normal personal taxes where the IRS filed when I did not and told me what I owed. That filing was delayed a few years dating it to around 2005-6 but again since it was normal taxes it should have been discharged since we are talking about 10 years. All liens were canceled -- so nothing weird. Problem is, to hire a tax attorney to fight a 4k debt would not be financially smart. Ideas on the next step?

[justbroke]

You just listed the reason why the IRS did not discharge the old $4K tax debt.

As for your tax debt, whether it is dischargeable under the 3/2/240 rule (3 years since due without penalty, 2 years since filing, and 240 days since assessed), is something that the IRS actually handles pretty well.

The bankruptcy code only discharges taxes for which you "filed" a tax return (and filed it on time or under any extension given you by the IRS). The IRS filed a Substitute Return (SR) on your behalf and this mans that you failed to meet the requirements under the law.

You may want to check on a free consult with a tax attorney and see if it's worth fighting. From my reading and personal knowledge and experience, caselaw is pretty settled on this topic -- if the IRS filed an SR then any tax liability from that SR is non-dischargeable. I also, personally, believe that if you were to go after dischargeability of this SR, then you'd open an adversary proceeding (AP) in the current bankruptcy (in the bankruptcy court). That could be expensive (with, perhaps a $2K+ retainer alone). Ask your tax attorney/professional about an offer in compromise (OIC) as well. You'll need the money available to pay the compromise that as well pay the tax attorney. From what I have read, tax attorneys are not cheap but it may depend on how much work is required. (Even the attorney fees for an OIC can cost $3,000 or more.)

Of course this is my personal opinion based on my personal situation. Only a licensed professional can provide you with the absolute best way to go and how tax laws work.

Good luck!