Attorney Disagrees on Proper Place to List IRS Debt

[clickman]

Middle District Florida

The feedback I have received on the forum says that back IRS taxes should be listed under SCHEDULE F - CREDITORS HOLDING UNSECURED NONPRIORITY CLAIMS

Note: I DO have an IRS Lien filed on my home.

The Attorney says to list on SCHEDULE E - CREDITORS HOLDING UNSECURED PRIORITY CLAIMS. She has some bk experience, don't know how much.

Any other opinions/advice? Does it really matter where they are listed?

Thanks

[clickman]

Bump

Any input on this?

[HHM]

It depends. (also, this issue does not vary by district).

If the taxes are, indeed, dischargeable, then they go on Schedule F, Unsecured, non-priority; if non-dischargeable, then they go on Schedule E, Unsecured-Priority

The lien complicates matters, if there is a lien, then the debt actually goes on Schedule D, Secured Claims and list the value up to the amount, if any, that is secured. Any "unsecured" amount will go on Schedule F or E depending on if the taxes are dischargeable.

[clickman]

First, let me state that the debt is definitely dischargeable. The taxes meet all the criteria for discharge, this is a Chapter 7 case.

Don't want to blow this opportunity to discharge these debts. If I listed them BOTH on Schedule D AND Schedule F (the FULL amount of the debt in both places) would that in any way hinder my bk?

I almost want to list them in D, E, F and throw in a few more places just to be sure :-).

What say you to listing in both D & F?

[HHM]

Here it the thing, the IRS lien attaches to ALL your property. Exemptions DO NOT APPLY.

It is imperative that you value the "secured claim" appropriately on the schedules. If you owe the IRS $50K, but the net value of your assets is $10,000. Then the IRS has a secured claim for $10,000 and a unsecured, non-priority claim for $40,000. It even gets more complicated; the penalties are NOT priority. Best practice, is you list the principle tax, penalties, and interest as SEPARATE claims on the schedules. Keep in mind, the schedules are a sworn document. If the IRS debts are dischargeable, in NO WORLD would you list them on Schedule E, period.

To continue with the above example. Let's say you owe the IRS $50,000, of that $30,000 is principal, $12,000 is penalty and $8,000 is interest, and lets assume all dischargeable, but there is a tax lien and the net value of your assets is $10,000.

Schedule D
IRS: Principal Tax: Secured Claim, $10,000
Schedule F
IRS: Principal Tax: $20,000
IRS: Punitive Penalties: $12,000
IRS: Interest: $8,000

Understand, you will still owe the $10K after your BK because of the lien.

I hope this answer is clear enough

[clickman]

Thanks for the detailed answer. Let me see if I have this through my thick head. Actual figures;

The only thing I currently own that can be attached by a Lien is my home. No savings, 401K retirement, stocks, etc.

Home value $190,500
Mortgages owed $188,969
Equity $1,531
Back taxes for multiple years $62,000
Taxes breakdown (will have to figure exactly) just say - $45,000 taxes, $8,000 penalty's, $9,000 interest

In D there are 2 columns;
AMOUNT OF CLAIM WITHOUT DEDUCTING VALUE OF COLLATERAL
here I would list the $45,000 in actual taxes before additional charges were added for penalties & interest.
UNSECURED PORTION, IF ANY
here I would list $43,469 ($45,000 owed less $1,531 in equity)

Then on Schedule F, I would list the remaining $60,469 (deducting the equity value that was shown as Secured on schedule D)
breaking that down to the principle tax, penalties and interest.

Correct?

I realize that the IRS will still have a lien on my property and/or anything I may purchase in the future. But if I followed your example correctly, it would only be in the amount of $1,531 (my actual equity), not the $62,000 as recorded? I thought it would still be a $62,000 lien?

Thanks for all your help.