State Taxes, Payment Plans, Tax Warrants and Wage Garnishments...

[CaroleAntsy]

oh, and I work for the state.

I owe back taxes to the state of Kansas for 2009 and I set myself up on a payment plan with them. KS requires a tax warrant be in place for all payment plans...ok. Things are fine until last Tuesday, 7/30 when I received a call from a collections guy stating that I had broken my agreement and the tax bill was now due in full. Well, I hadn't broken my agreement...it was a mistake in applying the one time $10 payment plan fee to 2010 instead of 2009 he saw that and corrected it, and reinstated the payment plan. All is well, or so I thought.

Today in the mail I received the Notice of Intent to Setoff dated 8/1/12 against my paycheck. Typical 25% which is, of course, financially devastating. I don't understand...what about the payment plan? Is it possible that this is just a mix up? Or are they setting my payment plan aside with no notice and garnishing my wages to pay the debt instead?

Is this now, finally, the time that I need to file bankruptcy? Goodness knows I have plenty of debt (taxes in KS & MO and IRS) from cashing in my IRA after my divorce, two repo'ed vehicles due to divorce... Will filing actually stop the garnishment? Taxes were just filed this year, so I know I need to pay those -- and I want to I'm just confused and riddled with anxiety.

And if you made it this far, I wish I could give you an actual treat.

~Carole

[LadyInTheRed]

It could be an error. Maybe the notice was generated automatically and couldn't be stopped when the payment plan was reinstated. Call and ask. But, based on your experience, I wouldn't rely on anything they tell you on the phone. According to the KS Office of General Services website, you have 15 days to file an appeal.

To assure due process, Kansas law requires that the debtor be given the opportunity to appeal the setoff procedure. The debtor initially has the right to appeal within 15 days from the date of the letter of intent to set off. If an appeal is received within 15 days, further setoff procedures are delayed until the dispute is resolved.

http://www.da.ks.gov/ar/setoff/agycriteria.htm#STEPS

I'd file an appeal if I were you, just to be safe. That will stop the garnishment at least temporarily.

I don't know if filing BK will stop the tax garnishment. If the tax isn't dischargeable, filing BK because of the tax may not make sense. Whether you should file BK will depend on your entire financial picture. One thing to consider: Can you pay off your unsecured debt in 5 years without filing BK? Or in 3 years if your income is above median?

[LadyInTheRed]

I just read your posts from earlier in the year. Did you find out when you filed your prior BK? Determining whether you are eligible for a Chap 7 is an important part of your filing decision.

Are you still without credit card debt? How much medical debt do you have? Are you paying anything on the medical debt? Are those creditors pursuing you? Have you caught up on your income tax filing?

If you can get back on a payment plan with the state and the other creditors aren't causing you problems, it may make sense to get all of your tax returns filed and try to wait until the tax debt can be discharged before you file BK. I believe that's 3 years after the filing date of the returns, but I'm not certain.

[CaroleAntsy]

Hi Lady --

I belive my Ch7 was discharged in 2006 so I would have to file a Ch13. I'm only paying basic living expenses and my car payment -- still no credit cards. The state tax debt will be paid off in less than 2 years...my car in less than 3. I do have the other debt - repo's and misc bills that I'm not making any payments on at all which could be paid through a 13.

All tax returns are filed - I'm gainfully employed and more than willing to make the payment plan payments I've set up with KS, MO and the federal government. I just feel a bit blindsided with this notice of garnishment and I'm hoping it's a systematic computer thing that wasn't stopped.

Do you (or does anyone) think that the garnishment by the state has anything to do with the fact that I work for the state? A sure thing kind of thing?? Like payment plan be damned...she works for us so her $$ is our $$.

[Fresh]

To your last question, I would answer no. I remember from another site reading about the number of employees who worked for the feds who were on payment plans with the IRS. What I would do is to try and figure out if this was a computer-generated thing. And, every time someone says that it's been handled, request something in writing.