Defending against incorrect proof of claims on secured tax debt

[bornfree2]

Not sure if i can explain this question clearly but I will try

Assume Debtor lists all taxing agencies on matrix to give them notice of BK and made best efforts to establish amount due on D (secured claim). By taxing agency I do not mean Fed or State but local municipalities.

But taxing agency thinks otherwise and based on their calculations (which are based on guideline assumptions not actual facts from Debtor) file a proof of claim with higher amounts. Debtor feels this is grossly incorrect.

What procedural actions or options can Debtor take to argue the amount owed is not the case. How can Debtor present evidence and facts to counter a Proof of Claim?

Put another way, how does Debtor lower or eliminate the amount owed on a secured claim assuming they have a strong case to prove the tax is too old to collect or not even applicable.

[justbroke]

In my personal and professional opinion, the IRS is generally pretty good at bifurcating taxes correctly. I have never had an issue with them in relation to claims in a bankruptcy (period). Facts from debtor don't matter since the tax code prevails. The debt is secured (via tax lien), priority (does not qualify for discharge), or unsecured (qualifies for discharge).

Put another way, I have not seen where the IRS has been wrong on dischargeability and liens. I'm sure there may be some cases where there are some questions, but this is beyond what the overhwleming majority of debtors experience.

I think where you may be overthinking is that an "old" tax debt is noncollectable. Once it attaches as a lien it survives until the maximum collectability period has ended which is generally 10 years. In some cases, the lien can extend beyond 10 years (tolling, refiling).

[bornfree2]

Its city tax debt not IRS. Yeah im researching the statute of limitation of the city municipality debts. Seems its 8 years but as usual if there is a condition for them to assert 'fraud' and want a full audit and that extends it indefinitely....ay vey.

I like IRS. They are pros. The website is extremely well done. The phone lines. Agents. The forms. everything is excellent about IRS and i am a very happy and dutiful tax payer. Never had an audit so dont know how nasty they can get. But that is one bill i make sure to pay 100% year after year.

Taxes and mail in our country work very well when you consider the scale of the problem they have to handle.

[justbroke]

Small towns are not that great. I had to argue with a small town over an old tax, so I understand the issue with smaller taxing authorities. It can take some coaxing, education, and patience to get them to do the right thing... or you'll have to file an adversary. But beware... under the American Rule you may pay a lot of money to argue over a minor tax issue (against a sovereign) and it may be better, especially in a Chapter 13, to just let the Trustee pay the taxing authority. Another reason to never file a Chapter 13 without an attorney.

[bornfree2]

Yeah im all for paying taxes so wont make an issues. The tax man has endless fund, redtape, and mindless bureaucrats. its not a battle worth fighting. In the event the trustee has to pay them but not enough in the estate liquidation fund, what happens to the balance? I understand one can pay any debt they like after a bk or during, so do i get a chance to negotiate a plan going forward? OR does the automatic stay prevent contact with creditors/tax agencies for negotiations like that?

[justbroke]

If a bankruptcy doesn't sufficiently deal with the tax, then you can negotiate with the taxing authority after the case is closed. I did this after my Chapter 7. I entered into an OPA (online payment arrangement) after my case closed. The IRS is very easy to work with when the amount is under $50K.

Unless the tax was dischargeable and discharged, neither the automatic stay nor the permanent discharge injunctions apply.