IRS and Chapter 13

[IamOld]

I hope someone can chime in on this Des or anyone else...spouse ALONE filed Ch 13. We have about 48K in IRS back taxes (underwithheld, 401k withdrawals to pay bills) - Ch 13 proposed plan provides 100% payback at more/mo than pre-Ch 13 monthly payment to IRS>

Today (as i've read online at IRS.gov their Ch 13 manual) I receive a letter from a local insolvency manager - that a) this doesn't absolve me from joint liability (I knew that), b) interes/penalties for me continue to accrue (knew that),

and c) - IRS MAY take collection action against you during and after the BK case. Payments made by SPOUSE or the BK trustee during BK MAY be credited to SPOUSE's sole liabilities (if any - there are none) rather than joint liabilities yuo owe.

YOu may pay your joint liability in full, or submit partial payments at any time.

If you have any further questions, etc etc.

SO...is my goose cooked? The amount/mo they'll (eventually) be getting from trustee is MORE than what they had agreed with me.

Do you all think that this means that they WILL try and collect? Or will they wait and see what $$ comes ultimately from Trustee? Atty said when we filed 13, oh they'll leave you alone till after BK.


NOW - I cannot afford paying IRS and Ch 13 - although there is 401k I can decrease to pay IRS....

SO - I'm emailing this to atty first thing tomorrow - BUT do you guys think should I call IRS? Should I try to pay (really can't)....

AND I'm filing Ch 7 in about 3 months, and about $6K is dischargeable.

Any thoughts???

Just when I relaxed for a moment....

[catleg]

Post in ch13 forum, I don't think des reads collections.

[despritfreya]

Post in ch13 forum, I don't think des reads collections.

Actually I look at the "new posts" as opposed to specific forums.

Anyway, IamOld, the taxing agency would have the ability to collect against you since you are not currently in bk. This is where there is an advantage to a community property state and a tax that is a community property obligation. I do not know if you are/were on a payment plan but you might want to talk to the agency about an installment agreement. The payment plan could, at least in theory, take into consideration your wife's 13 and be a small amount on your end, but you won't know until you try for it. You need to "suck up to the IRS" until you are ready to pull the plug by filing the bk. Definitely discuss this with your attorney.

Des.

[IamOld]

Thank you Des - I'm sending this over to atty this morning. The plan actually proposes MORE than what I had been paying...the thing is, I cannot afford to pay IRS plus Ch 13 UNLESS I reduce the 401k contribs that atty is having me do - I suppose that's a wash....

Would it be up to him to contact IRS?? Or will it be me? I absolutely agree with you, I don't think that contact can or should be avoided...

Actually I look at the "new posts" as opposed to specific forums.

Anyway, IamOld, the taxing agency would have the ability to collect against you since you are not currently in bk. This is where there is an advantage to a community property state and a tax that is a community property obligation. I do not know if you are/were on a payment plan but you might want to talk to the agency about an installment agreement. The payment plan could, at least in theory, take into consideration your wife's 13 and be a small amount on your end, but you won't know until you try for it. You need to "suck up to the IRS" until you are ready to pull the plug by filing the bk. Definitely discuss this with your attorney.

Des.

[despritfreya]

Would it be up to him to contact IRS?? Or will it be me? I absolutely agree with you, I don't think that contact can or should be avoided...

Depends on his policy. Our office rarely gets involved with installment agreements but, when we have "companion" type issues we do. . . For example, payroll taxes (trust portion) that can be assessed against the individual non-debtor despite being paid in a Chapter 11 corporate case. Usually we will work with Special Procedures to forego collections against the individual so long as the Chapter 11 payments are made. This is kind of your situation so, most likely we would make at least the initial contact and see where it goes from there.

Des.

[IamOld]

Thank you Des!!! Do you think that it .....helps that the proposed plan
calls for 100% payback to them?

[despritfreya]

The Plan has to "call for 100% payback to them" at least as it relates to the priority claim so, no I don't think that is going to be a factor -If the Plan pays the non-priority claim as well, then, maybe.

Des.

[IamOld]

Right Des - the proposed plan calls for 100% payback, but IRS went "by the book" and taxes about 20% of the total - more than 3 years old they've got listed as just regular unsecured....SO if I wind up talking to IRS, hopefully the person is reasonable, because cash-wise they're getting (will be hopefully!) $800 and change per month...so maybe I can take the "unsecured" portion and divided that by 60 months and pay that to them...

[BigJohn]

IRS can be nasty.

From my experience, they will proceed with their collections while you are in Bankruptcy, in my case Chapter 13.

My lawyer was of no assistance but he did refer me to a CPA. The CPA worked for the IRS and since she became my power of attorney, I have not been contacted by the IRS once nor have I paid them a penny. She claims in my case they will not be getting anything.

Your case probably is different.

In my case they showed up one day and said they weren't leaving till they saw a death certificate.

Nasty people.

[IamOld]

Wow - so do you also think that I should respond to the letter? I mean they are (will be - I hope) getting over $800/mo. Atty says (my words) chill out for now, and let him know if I get anything nastier. I've a feeling I'll need a tax "person" at some point in time...

I'm supposed to do Ch 7 in Sept...do you think they'll do anything till then??

FYI - we've been good "customers" since 2005 - always paid on time.

AND - do you think your CPA would be able to refer accross the country? Also...may one ask...how expensive was this CPA?????

IRS can be nasty.

From my experience, they will proceed with their collections while you are in Bankruptcy, in my case Chapter 13.

My lawyer was of no assistance but he did refer me to a CPA. The CPA worked for the IRS and since she became my power of attorney, I have not been contacted by the IRS once nor have I paid them a penny. She claims in my case they will not be getting anything.

Your case probably is different.

In my case they showed up one day and said they weren't leaving till they saw a death certificate.

Nasty people.

[catleg]

Read the first sticky. It tells you which notices are the "serious" ones to look out for.

[BigJohn]

Wow - so do you also think that I should respond to the letter? I mean they are (will be - I hope) getting over $800/mo. Atty says (my words) chill out for now, and let him know if I get anything nastier. I've a feeling I'll need a tax "person" at some point in time...

I'm supposed to do Ch 7 in Sept...do you think they'll do anything till then??

FYI - we've been good "customers" since 2005 - always paid on time.

AND - do you think your CPA would be able to refer accross the country? Also...may one ask...how expensive was this CPA?????

The CPA that helps me used to work for the IRS. She now hates the IRS. So far, she has not charged me one cent!

Ask your lawyer if he/she knows somebody in your area.

[IamOld]

Read the first sticky. It tells you which notices are the "serious" ones to look out for.

Thanks again - I have the whole thing printed out!!!!

[IamOld]

The CPA that helps me used to work for the IRS. She now hates the IRS. So far, she has not charged me one cent!

Ask your lawyer if he/she knows somebody in your area.

Wow that is awsome...I know the bk atty knows tax people if needed....

[Pandora]

Iam

What was the reasoning again behind filing sep BK chapters? I'm not quite understanding why you didnt file with your wife for Ch. 13 - especially if most of your debt is secured / priority vs. unsecured and you're not going to get it discharged. Would seem to me that once you file and even if you get your Ch. 7 discharge, once your income free's up, then the possibility of your wife's Ch. 13 plan going up may be possible. ??

Des - would it work that way?