Still owe taxes after filing CH7

[Blue14]

We have filed CH7 and the BK is closed but we still owe money to the IRS for tax year 2007. I contacted the IRS when we were in the process of filing in 2008 and told them so they put a hold on sending collection notices for the amount we owe. I believe we still owe the IRS about $2100. I have contacted the IRS since our BK was closed in 2008 to make arrangements to pay the money we owe b/c I haven't received anymore collection notices in the mail. The IRS said they are so backed up and it may take awhile before we receive anything. I was worried and didn't want them to come after my wages or something. We are getting ready to file income taxes for 2008 and I'm assuming that whatever we owe to the IRS will be subtracted from the refund that we get, right? I'm also wondering if the IRS will charge us interest for all this time that we haven't paid? As of today, we still haven't received any paperwork from the IRS saying we need to pay although I know we still owe it to them. Has anyone else had this experience?

TIA

[Trixie007]

I would think... yes and yes. Yes, they will keep any refund unless there's some glitch in their system (unlikely), and Yes, they are piling up their exorbitant interest and/or penalties on what you owe. Sorry.

[Blue14]

I just hate that the IRS would charge me interest for all this time, when I did try and make the effort to make a payment schedule to pay the balance off.

[StartingOver08]

Yes, the IRS takes what is owed out of your refund. If your refund is smaller than what is owed - you get a letter saying how much was retained, what the balance due is and what the interest rate and per diem charges are on your balance.

If you really want to work it out, go to the IRS office in your city and sit down with a customer service rep () and they will draw up a payment plan with you that you can afford right then. You sign the agreement and they send it off to *where ever* and then a confirmation letter is sent to you agreeing to the payment plan. It normally takes about 4-6 weeks for this process. In the meantime you make payments as agreed.

Really it is painless. Also, it is better to be pro-active and contact the IRS then to let them contact you first (in my experience)!

[Blue14]

When I talk to the guy on the phone with the IRS, he never told me I could go to a local office nearby and set up a payment plan. He told me that I should get something in the mail, which of course I haven't seen a thing yet. I also went online to the IRS website to set up a payment plan (which is what I did for the state tax that we owed) and it will not allow me to sign in. It says something like "sorry we are unable to process your request at this time". The guy also told me that I had to talk to a special department b/c the account was on hold until the BK was finalized, so he couldn't even help me himself. I guess I just will be frustrated if I have lots of interest to pay b/c I did make the attempts to call and go online to set up the payment plan. Now we are two weeks away from our appt. to file out taxes for 2008, so it seems a little late to go to the IRS office and set a payment plan since they will get there money first and then give us whatever is left. What a mess!

[StartingOver08]

Believe me, it is a lot easier at the local office. Just try it. They don't yell at you or get upset...it really is just everyday business with them. Now that your BK is discharged and closed, they can talk to you again.