Dealing with dischargeable IRS Taxes and liens

[bkstuff1]

First, a little background:

I’ll be filing a pro se chapter 7 in the middle district of Florida.
I have total assets of $2k (home furnishings, a pet, clothing, and a $1200 tax refund). All of this is way below the state exemption of $4k.

I have a federal tax lien against me for 1999 income taxes. The return was filed on time (2000). An audit was triggered in 2001 and IRS assessed me additional taxes/fees/penalties/etc in 2002. In 2008 there was a lien filed against any and all assets for ~$6k.

Obviously the taxes are in compliance with the 4 rules for discharging.

Now I have 2 problems:

First, my understanding is that this balance would go on schedule D (because it’s a lien). However I am not quite sure how it should be listed. Specifically, the value of claim and unsecured portion figures. My total assets are $2k and I realize nothing is exempt for IRS purposes, so should I put $2k on the “value” line and $4k on the unsecured? If not how should all this be entered on schedule D?

Second, what motions do I need to submit to deal with this? I believe I need to file a motion to value the lien, but I’m not sure if that takes care of the whole thing or just the lien portion. Is there another motion that needs to be filed to reduce/eliminate the underlying tax liability? If so, what is it called?

Any help here would be immensely appreciated. Thank you.

[biotechsolution]

Don't do anything and there is a good chance that your discharge will trigger an automatic lien release.
Otherwise request a lien release from the IRS 60 days after your discharge.

[HHM]

1. Yes, on the schedules, you bifurcate the claim as secured and unsecured if the value of the assets is less than the the debt owed.
2. You probably won't need to file a motion. Heck, the statute of limitations on the tax debt will expire soon (next year) so the lien will drop off then anyway.

Generally, if the lien only attaches to personal property, the IRS will typically release the lien with a quick call to the IRS insolvency division. But, if you did file a motion, it would be a 506 motion to determine secured value.

[justbroke]

bkstuff1, I think that the information provided by HHM is accurate. You should be able to get rid of that lien. The only part I don't know, for Middle District, is whether that would be a 11 USC 506 Motion or a 11 USC 522(f) Motion to Avoid. I guess that the 11 USC 522(f) motion to avoid lien due to impairment of exemption, could ask for an 11 USC 506 valuation in the same motion.

I actually had to do one of these and I know that for captioning sakes, and to make sure the Clerks enter it correctly on the Docket, you must put "Pursuant to 11 USC 522(f)" under the caption or it may go in as a generic motion. Also, remember, that negative noticing is allowed in Florida!

Actually, in Florida (and Middle District) it's a combined motion. It's a Motion to Determine Secured Status and Avoid Lien (Pursuant to 11 USC 522(f)).

[HHM]

Justbroke

Since exemptions don't mater for IRS liens, it would be 506, not a 522(f).

[justbroke]

Since exemptions don't mater for IRS liens, it would be 506, not a 522(f).

I was using my motion to do the same, but you're right. Mine were for non-possessory non-PMSI liens on household goods. It was a combined motion though; both a 506 and 522(f) motion.

[bkstuff1]

So just for clarification, I need to file a "Motion to Determine Secured Status and Avoid Lien (Pursuant to 11 USC 506)"?

[HHM]

Strictly speaking, yes. Practically speaking, no. Go to www.irs.gov. Find the phone number of the IRS insolvency division for your area and give them a call. Have them review the situation and see if they will simply release the lean upon discharge.

[bkstuff1]

Ahh... ok cool, I'll give em a call tomorrow. Thanks guys! Your the best!

[bkstuff1]

Well, no luck on calling the insolvency department yet. I left em a message but as of yet haven't heard back. I'll keep plugging away at it though.

On a slightly more important note, I checked pacer today and it says that i need to file a statement of intentions with regard to this tax lien (because it is on schedule A). The form seems easy enough, but I want to retain my (exempt) property and need to declare my intentions. My options are "redeem the property", "reaffirm the debt", or "Other. Explain________ (example of 522f motion to avoid)"

None of these seem like they fit the situation. To redeem the property, I would have to pay IRS the value of the lien (which I don't have), reaffirm the debt (which is inapropriate because its for taxes that should be discharged in bk), and if I'm not filing a 506 motion, I don't know what I could even put for an explination for other.

Any suggestions on how to think about this situation?

[justbroke]

Sometimes, putting "pay and retain" in "other" is okay. Remember, this is just your intentions and not a contractual statement.