Chapter 7 and Federal Taxes

[HHM]

Actually, discharging tax debt has very little to do with state by state issues. The BK code determines if the tax is discharegable.

Sounds like you need to have further discussions with your lawyer. I am concerned, when you say the lawyer files the most cases in the county, that is sometimes not a good thing when you have a hands on case.

[butterfly57]

Actually, discharging tax debt has very little to do with state by state issues. The BK code determines if the tax is discharegable.

Sounds like you need to have further discussions with your lawyer. I am concerned, when you say the lawyer files the most cases in the county, that is sometimes not a good thing when you have a hands on case.

Okay, for the answer about the state, thank you. Second, yes I agree, further discussion is needed with attorney or para-legal. The 2nd attorney was the one that kind of boasted that he does the most cases in our very large county, I'm thinking he said that to comfort us in some way. My gut is telling me to go with the 1st guy even though he is somewhat arrogant, and very pompous and he will tell you he's one of best attorney's around. But, I am a supreme worry wart by nature and over think things to the max. Ugh.....what to do, what to do?

[techguy74]

I read through this entire thread and want to verify one thing; if a lien is filed, the tax debt survives the bankruptcy, NO MATTER HOW OLD?

I have been trying to avoid filing bankruptcy for a long time, but now it has come to a boiling point and I cannot even to go grocery shopping, NO EXAGGERATION.

[HHM]

I read through this entire thread and want to verify one thing; if a lien is filed, the tax debt survives the bankruptcy, NO MATTER HOW OLD?

I have been trying to avoid filing bankruptcy for a long time, but now it has come to a boiling point and I cannot even to go grocery shopping, NO EXAGGERATION.

Correct, if there is a tax lien, the lien survives bankruptcy. However, tax liens are only good through the statute of limitation to collect the underlying tax (10 years), unless the IRS went to the trouble to get a civil judgment.

Also, if the tax lien is for a tax debt that can be discharged, then the lien is only worth the equivalent of your assets. So, for example, if the tax lien is for 20K, but you only have $2,000 in assets, after bankruptcy, you will only owe $2,000, not all $20K.

[biotechsolution]

Correct, if there is a tax lien, the lien survives bankruptcy. However, tax liens are only good through the statute of limitation to collect the underlying tax (10 years), unless the IRS went to the trouble to get a civil judgment.

Also, if the tax lien is for a tax debt that can be discharged, then the lien is only worth the equivalent of your assets. So, for example, if the tax lien is fir 20K, but you only have $2,000 in assets, after bankruptcy, you will only owe $2,000, not all $20K.

Also be cautious if you have a 401k the IRS could still go after it to satify the lien. There is previous case law for this option. Because your 401k is excluded from your BK it is not exempted.

[strawfox]

Do I have to pay the IRS monthly payments for three years and after that I can discharge them? How does that situation relate to the Ch13 I am about to file now?

[ValleYum]

Do I have to pay the IRS monthly payments for three years and after that I can discharge them? How does that situation relate to the Ch13 I am about to file now?

That depends on if you are paying the IRS with spam.

[arthoralbert]

Nice information share thanks to all of you..

[NewStart2012]

Hi! Do you know if a tax penalty for filing late can be included in a bk 7? If so, can these be discharged with all other debts? TIA!

[BarkingCat]

Hi! Do you know if a tax penalty for filing late can be included in a bk 7? If so, can these be discharged with all other debts? TIA!

If the taxes are dischargable, then yes, any associated punitive penalties, e.g. late filing penalty, are also dischargable.

[NewStart2012]

We just filed taxes earlier this year. I read on here that taxes are incl in discharge if filed over 3 years ago. Does that mean since we just filed this year and the penalties were issued this year, they can't be included in the bk?

[ValleYum]

We just filed taxes earlier this year. I read on here that taxes are incl in discharge if filed over 3 years ago. Does that mean since we just filed this year and the penalties were issued this year, they can't be included in the bk?

What tax year were they for? If they are 2011 income taxes - no.

From: http://www.nolo.com/legal-encycloped...ing-29550.html

When You Can Discharge a Tax Debt

You can discharge (wipe out) debts for federal income taxes in Chapter 7 bankruptcy only if all of the following conditions are true:

• The taxes are income taxes. Taxes other than income, such as payroll taxes or fraud penalties, can never be eliminated in bankruptcy.
• You did not commit fraud or willful evasion. If you filed a fraudulent tax return or otherwise willfully attempted to evade paying taxes, such as using a false Social Security number on your tax return, bankruptcy can't help.
• The debt is at least three years old. To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.
• You filed a tax return. You must have filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy.
• You pass the "240-day rule." The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. (This time limit may be extended if the IRS suspended collection activity because of an offer in compromise or a previous bankruptcy filing.)

[NewStart2012]

Thank you so much for the info ValleYum! It was for 2010; so, guess not Bummer! Thanks again.

[ValleYum]

Thank you so much for the info ValleYum! It was for 2010; so, guess not Bummer! Thanks again.

Awww - drats! I am glad the info helped!!

[NewStart2012]

Double drats ;) Thanks again tho!