IRS Problems/Lien Question (Sorry Long)

[southernbelle]

Yesterday I received a certified letter from the IRS that stated in BIG BOLD LETTERS "URGENT!! We intend to levy on certain assets. Please respond NOW." It also stated that I had 10 days from the date of the letter to respond. I don't have the money to pay them in full, so I called their 800 number to get some clarification. I spoke with what I thought was a nice guy from the IRS that basically said that the notice means that my case was being turned over to collections and I would get a local person assigned to my case. I asked for clarification and he didn't seem to know very much. He basically told me that since I had so much owed to them, the letter was to inform me that they were referring my case to the collections dept. It didn't seem like that to me. I asked if there was another number I could call to find out who would be handling my case and he took my number and said that the guy handling my case would call me in about 30-60 days. What the heck??? Call me, are you kidding? The letter didn't seem to say any of that!!! I asked if they had a lien filed and he said it didn't look like it and he didn't know what the procedure was for filing liens since "that wasn't his department." Useless!!!!

Oh my sweet Lord!! I couldn't believe this conversation. He was basically telling me to sit tight for 30-60 days and do nothing (I asked if I should send an Installment Agreement request to head off filing a lien and to show my intentions to pay the money I owe and he said not to). I'm sorry, but I can't sit still long enough to just watch my life go down in flames anymore than it already is, which is why I have Chapter 13 questions. Oh, and did I forget to tell you he even had the stones to ask me for my bank information. I remember reading a post from someone else here where they did the same thing to them, but I was thinking fast. I have an old business account with a lien from the state for taxes on it and I gave him that bank information to him. Technically I didn't lie, but I'm not making it that easy for them to steal my money. If I have to, I'll withdraw everything each payday, just in case. He even asked for the address of the bank. The nerve. Since I have mandatory direct deposit, I have to have a bank account and I didn't mention where my paycheck really goes, but I feel like I have some quick maneuvering to do before collections gets their hands on me. Man these people seem to want all of their money at once or they put the screws to you.

I've tried everything I can think of to pay them, refinancing, borrowing, etc, but on the eve of filing BK, I don't want to seem like I'm trying to pull something shady. I haven't exhausted all refinancing efforts, but I've stopped paying cc's and it will be more difficult than normal to get an approval.

The one thing I am most frightened of is the IRS filing a Tax Lien on me for my house, car or whatever else. I'm all set to file Chapter 7, since I don't make enough for a Chapter 13, but with the IRS breathing down my back, I'm confused and have more questions. (Sorry guys)

I've read that no one will touch you if you have an IRS tax lien so even if I decide a few years after the ch. 7 discharge to buy another house, the IRS will make things impossible. If my 8 year old car breaks down, I might not be able to buy another one.

The only way to be able to afford a Chapter 13 and to pay all non-dischargeable debt (possibly without penalties) would be to give up my home and live with family or friends and significantly reduce the amount of expenditures every month, which I am perfectly willing to do since the IRS seems like they can do pretty much anything they want with me since I can't pay in full. I've hit rock bottom and I'm willing to swallow my pride to make a BK plan work to get rid of this headache.

I also read that if they decide to garnish my wages, they can take all of my check and leave me with $344.23 biweekly. I can't even pay my mortgage with that!!! My questions are:

1. If I decide to give up my home and file 13, would the rent paid to relatives or friends in a roommate type situation be considered legitimate housing expenses? (If I had a notarized statement from the friend/relative would that help?) I know this isn't the same as owning or renting where I'm on the mortgage or lease, but is this allowed or would I get $0 for housing allowance? I would have to put everything I own in storage. Would that cost be allowed?

2. If I could get my home refinanced in the next month and paid the IRS, (hopefully before they file a lien), would it seem suspicious if I file Ch. 7 shortly afterwards and is this considered a preferential payment? Would the BK court actually go to the IRS for that money back or simply dismiss my case?

3. Has anyone here had first hand experience with the after effects of an IRS tax lien? I'm trying to get more information as to how this lien can affect me.

Sorry to ask so many questions, but everything seems to get worse when I think they are getting better. I'll ask my atty. these questions Monday, but I was hoping for some feedback before then. Thanks again.

[emoney]

Relax and take a breath. From my experience the IRS is the best creditor to have. Yes they have the power to sell your house and take part of your wages, but they don't do that very often IF YOU WORK WITH THEM.
They are what is called a priotory creditor. They stand behind your secured creditors, but in front of your other creditors.
Your situation requires the review of an experienced attorney or CPA or both. For example IRS debts can be discharged in BK after they have been outstanding for about 36 months.
regards,
emoney

[diviaruba]

For example IRS debts can be discharged in BK after they have been outstanding for about 36 months.
regards,
emoney

Not technically true. To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy. In addition, 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.)

If your taxes qualify for discharge in a Chapter 7 bankruptcy case, your victory may be bittersweet. This is because bankruptcy will not wipe out prior recorded tax liens. A Chapter 7 bankruptcy will wipe out your personal obligation to pay the debt, and prevent the IRS from going after your bank account or wages, but if the IRS recorded a tax lien on your property before you file for bankruptcy, the lien will remain on the property. In effect, this means you'll have to pay off the tax lien in order to sell the property.

[southernbelle]

Relax and take a breath. From my experience the IRS is the best creditor to have. Yes they have the power to sell your house and take part of your wages, but they don't do that very often IF YOU WORK WITH THEM.
They are what is called a priotory creditor. They stand behind your secured creditors, but in front of your other creditors.
Your situation requires the review of an experienced attorney or CPA or both. For example IRS debts can be discharged in BK after they have been outstanding for about 36 months.
regards,
emoney

Sorry, I really think I am freaking out. The certified letters with the threatening bold letters and the sly way the IRS rep. tried to get my bank information didn't give me a warm and fuzzy feeling though. The taxes I owe are for payroll taxes from 2003-2007, and from what I've learned aren't dischargeable under any circumstances. The penalties and interest might be, but I would have to file to find out how much is considered unsecured.

I also didn't know that filing a Chapter 7 would keep them from going after my wages/accounts, but is it correct in assuming the tax lien would still end up on my credit report? I've got enough problems. I'm recently divorced with tons of debt and I don't want to be unable to get credit of any kind for 10 years.

Anyone have any thoughts on how the housing allowance is handled if I give up my home (allow it to be foreclosed) and live with friends or relatives?

[Kentucky-BK]

An individual that cannot afford to pay tax debt in full may want to contemplate sending an "Offer in Compromise" to the IRS. You can find the Form to submit an Offer in Compromise at the following link: http://www.irs.gov/pub/irs-pdf/f656.pdf

Another link with useful information regarding an IRS Offer in Compromise is as follows: http://www.irs.gov/businesses/small/...109622,00.html

[CindyLou]

yes, like emoney said, take a deep breathe! You need to call back and talk to someone different! You were unliccky to get that guy!

My friend at work received the same type of letter and called the IRS and they were VERY easy with her and set up a payment plan that was very reasonable! They also put a hold on the lein. Call them first thing monday and talk to someone else!

[southernbelle]

yes, like emoney said, take a deep breathe! You need to call back and talk to someone different! You were unliccky to get that guy!

My friend at work received the same type of letter and called the IRS and they were VERY easy with her and set up a payment plan that was very reasonable! They also put a hold on the lein. Call them first thing monday and talk to someone else!

Thank you VERY much Cindy. That helps. I am ready to give up my home to deal with them. These letters are intimidating and I don't want extra headaches right now. I will call first thing Monday morning since the first guy didn't seem to know much at all. The only thing that bothers me is the amount I owe them, which is alot. Hopefully the monthly amount will be reasonable. Thanks again.

[southernbelle]