Dealing with non-discharged tax debt after CH/7 Discharge - Can anyone please help?

[TatteredInTexas]

Hello folks,

Got a big problem and hoping I can get some help...

My chapter 7 (Pro Se) filing was completed and discharged on the 6th of February. However, I have some outanding tax debt ($21,000) that was not able to be dischargable in the bankruptcy.

Today, I recieved a letter from the IRS, stating they will begin levying on my accounts/wages if payments are not received.

Presently, I am living with family (due to a pending divorce), own nothing, and am working for a measly $8.00 an hour.

Has/does anyone have any experience with the OIC (Offer In Compromise) settlement agreement with the IRS, or perhaps any other possible suggestions of how to handle this issue? I've seen lots of ads about "Tax Settlements For Pennies on the Dollar", but I just don't know if they are trustworthy, and if this is something I can handle myself and maybe save the fees?

Any and all help would be greatly appreciated!

Kind Regards,
TatteredInTexas

[down @ out]

taxes after bankrutpcy

I have the same mess you do but I believe there is a chance some of the debt will be discharged and I don`t have the magnitude of tax debt you are dealing with.

Before my bankruptcy I tried an offer in compromise and I can tell you that basically the irs is pulling a scam with this and so are the outfits promising to let you pay pennies on the dollar.

Getting a oic through the irs can take easily a year and they have so many trip wires that getting one approved requires you to be basically on your deathbed. I believe the reality is the only way to get a oic approved is to not need one.

Really this is quite a pickle to be in. I wish you all the luck in the world. I am just hoping the mafia(irs) doesn`t stick it to me too bad.

Isn`t it a pile of crap to go through all the pain of a bankruptcy and have the irs waiting. Man it just ain`t right.

good luck

[SinkingFast]

Those ads are generally hoaxes. Attnys we had Consults told us that. If the tax debt is old enough to discharge, it woulda been gone in the BK. If the tax debt cannot be discharged in BK, you're stuck owing it and having to pay up.

We owe the IRS $8K for 2005 and there's nothing to be done about it in BK for us. Attnys have suggested a payment plan with the IRS. I found the website that discusses OIC. First thing the IRS wants you to do is take a loan, pay with cash advance on a CC, or sell assets to pay the money in full. The IRS obviously does not want to set up a payment plan. The IRS will set up a payment plan if there's no other alternative.

People here have dealt with the IRS in payment plans. Maybe one will chime in about how it works.

Edited to add:

Someone, and I think it was Art, told me to go ahead and submit the application when we file our taxes. That it generally takes the IRS quite a few months to respond to the initial application.

Meanwhile, penalties and interest are accruing while you wait on the IRS to reply to your application. At least that's how I understand it.

[TatteredInTexas]

Thanks all!

Yes, it is a real kick in the seat of the pants to finally complete bankruptcy and then have to deal with the IRS hounding the devil out of you. And, unfortunately, they don't seem to care whether you have a place to sleep, anything to eat, or other necessities... just as long as they get paid their money!

I guess I will have to call them and see what kind of payment plan I can setup, because if I dont - they will take it anyway. Making $8.00 per hour, I can only imagine that my monthly payments would barely cover the ongoing penalties and interest.

Ain't life just grand sometimes? :-(

All the best,

Tattered

[poorme]

Actually, the IRS does accept a lot of OIC's, but the key is having good representation. There are trip wires in the process, and if you stumble they can reject your offer as frivolous and try again to nail you. Best advice is to get a local tax pro to assist you. That DOESN'T mean they have to be an attorney, there are lots of CPA's and other authorized tax agents who perform this assistance. One thing they CAN do on your behalf is to contact the IRS and get a full, complete disclosure on each of the taxes, fees, penalties, etc. and determine which 'category' they fall into. As long as you're actively working to reqach a settlement, so what if it takes a year or two? I know someone who started a payment plan but kept preparing an OIC which was finally accepted, paying a tad over $7k on a presumed $65k tax bill. The IRS would rather have you pay something and settle the matter than have it drag on.

[TatteredInTexas]

Hi all,

Sorry, one more quick question...

The IRS shows I owe for years 2002, 2003 and 2004. I filed my chapter 7 in October of 2005. Seems to me that the 2002 taxes should have been wiped out. Wouldn't they be considered as being past the 3 year status?

Thanks once again for all of your kind assistance!

Tattered

[TatteredInTexas]

Hi poorme,

Thanks for the advice. I will call a couple of local folks and see what I can come up with.

Best,

Tattered

[SinkingFast]

Hi all,

Sorry, one more quick question...

The IRS shows I owe for years 2002, 2003 and 2004. I filed my chapter 7 in October of 2005. Seems to me that the 2002 taxes should have been wiped out. Wouldn't they be considered as being past the 3 year status?

Thanks once again for all of your kind assistance!

Tattered

Nope. We are just now filing for tax year 2005. So last fall, 10/2005, 2001 would have been dropped off in the 3 year rule.

[SinkingFast]

Actually, the IRS does accept a lot of OIC's, but the key is having good representation. Best advice is to get a local tax pro to assist you. That DOESN'T mean they have to be an attorney, there are lots of CPA's and other authorized tax agents who perform this assistance. One thing they CAN do on your behalf is to contact the IRS and get a full, complete disclosure on each of the taxes, fees, penalties, etc. and determine which 'category' they fall into. I know someone who started a payment plan but kept preparing an OIC which was finally accepted, paying a tad over $7k on a presumed $65k tax bill. The IRS would rather have you pay something and settle the matter than have it drag on.

TY Mucho Greato for the info. Will check into that!

[brokentex]

The IRS will do a payment plan if you owe less than 25K. You can even do one for more than 25K but you have to get approval. They charge $43 to set it up + interest and you have to pay it in full in 36 months or less.

http://www.irs.gov/businesses/small/article/0,,id=124483,00.html

[edwards2]

We owed the IRS about $7K and worked out a payment plan with them. Our accountant tried to get the penalties waived but to no avail...so much for the kindler, gentler IRS. Anyway, we paid them $100 a month and paid if off early because we were due a refund...they got it of course and it was during the time President Bush gave everyone that $800 a year refund....which of course they got as well. We didnt even attempt to contact one of those companies who PROMISE the IRS will settle for X amount of dollars. They wanted too much of an upfront fee with no guarantee. Of course we did not owe as much as you guys but with all the medical bills we had it might as well have been. By the way the taxes went back 3 years...

[poorme]

I'm not sure that federal taxes greater than 3 years will 'automatically' get wiped out. I think (according to my bk attny) that some forms have to be filed with the bk filing specifically identifying the year(s) and breaking down the taxes, fees, penalties, etc. in order to actually get included. Again, best to have a pro work this for you if you plan to include them in the bk. NOW, if anyone out there has other experiences in this area, please share how you got your back taxes dumped in bk!! There are precious few substantive threads on this topic.

[TatteredInTexas]

Hi folks,

Here's an update on the situation...

I talked to the IRS last eveing and they want a minimum "streamline" payment of $322 a month. Since I only make $1087 a month, and most of it goes on my present bills, there is no way I can make that hefty amount of a payment. When I told the representative my story, she said I would have to go "non-streamline" and transfered me to someone else.

To make a long story short, I said I could pay maybe $150 - $160 a month on the debt. The representative told me, since I am expecting a refund for 2005, to file my current taxes (too see how much it will bring the debt down), and also file form 433-F - "Collection Info Sheet". They gave me a 6 week extension to get these things done, before they move forward with the levy.

Now for the kicker...

Because I am going "non streamline" they automatically file a federal tax lien against everything I own and my "soon to be" ex-wife owns, until the full amount of the debt is paid + penalties and interest continue to accrue. This can go on for the next 10 years. Additionally, they reserve the right to levy on my bank account and garnish my wages.

They even had the nerve to ask me if I could borrow the full amount from parents or a friend in order to pay the debt. Sheesh!

I just don't know if there is a way to ever dig out of this hole. I thought the bankruptcy would give me a clean start, but now this problem surfaces.

So depressing!

I appreciate everyone's comments and suggestions.

Best,

TatterdInTexas

[SinkingFast]

Hi folks,

Here's an update on the situation...

I talked to the IRS last eveing and they want a minimum "streamline" payment of $322 a month. Since I only make $1087 a month, and most of it goes on my present bills, there is no way I can make that hefty amount of a payment. When I told the representative my story, she said I would have to go "non-streamline" and transfered me to someone else.

To make a long story short, I said I could pay maybe $150 - $160 a month on the debt. The representative told me, since I am expecting a refund for 2005, to file my current taxes (too see how much it will bring the debt down), and also file form 433-F - "Collection Info Sheet". They gave me a 6 week extension to get these things done, before they move forward with the levy.

Now for the kicker...

Because I am going "non streamline" they automatically file a federal tax lien against everything I own and my "soon to be" ex-wife owns, until the full amount of the debt is paid + penalties and interest continue to accrue. This can go on for the next 10 years. Additionally, they reserve the right to levy on my bank account and garnish my wages.

They even had the nerve to ask me if I could borrow the full amount from parents or a friend in order to pay the debt. Sheesh!

I just don't know if there is a way to ever dig out of this hole. I thought the bankruptcy would give me a clean start, but now this problem surfaces.

So depressing!

I appreciate everyone's comments and suggestions.

Best,

TatterdInTexas

What phone number did you call??!! I WANT that number!!

I want a tax lien!!

I could keep my truck if I could get the IRS to put a tax lien put on it!!

[down @ out]

Tattered in Texas

Man what a mess.

The IRS is just a bunch of thieves.

The problem you have is that with penalties and interest you will never get rid of this mess. Keep in mind they don`t really care.

May want to consider going underground and other such possibilities. Bottowm line is your current income will not handle all of this stuff and you have to decide if eating is more importent than paying the bums.

Good luck