My own personal Chapter 13 nightmare (IRS)

[toph80]

Hello everybody,

I've been reading the forums for a while and I've received a great deal of good information here. I'm posting because I REALLY need help. I don't often post to forums, but I'm just CERTAIN that somebody out there has some advice for me. Please bear with me, this is a very long story, but I'll try to condense.

OK ... the story starts out looking good, but gets horrible quickly. I filed Chapter 13 in late 2007 on a 36 month plan and completed the plan at the beginning of the year. The primary reason I filed was for one year of taxes (2000) for which I had a $145k plus debt, after penalties and interest. I did not file for 2000, and was chased down by a revenue officer in 2005, and he had me file the return and marked me CNC, as I was changing careers and going back to school for my degree. The return was officially filed in March 2005.

I finished school in 2007, started my new career, and filed Chapter 13 at the end of the year. My taxes were classified by the IRS as unsecured nonpriority on their POC, and life moved on. I completed my plan payments early this year and received my discharge letter.

Now the fun part ... at the end of May, I get a collections letter from the IRS stating that I owe $145K. They sent me a CP504 (Notice of Intent to Levy State Income Tax Refund). I thought it was a mistake, so I called them. After being shuffled around from group to group, I finally figured out why they think I owe them. The RO never filed the return, so they have me as unfiled for 2000. Well, THANK GOODNESS I have a stamped copy from the RO stating that I filed and on that specific date. I told this to the IRS, and they said it didn't matter that I had a stamped return - that I was unfiled, and that was that. My research has led me to believe that this debt was dischargeable, as the taxes are over three years old, and I was filed two years before the date I filed for Chapter 13.

Additionally, my life is in flux right now. I'm getting ready to move across the state in one month and start a graduate program. I'm going to be going from making 50K a year to living on students loans. I do own two cars, one of which is worth 10K-12K and is fully paid off, and another which is worth about 20K-25K that has a 12K lien on it. I also have some savings (about 15K) that I need to use for college to live on, as my income is going to be next to nothing. The last thing I want is for the IRS to take all my money and all my possessions, which would jeopardize my schooling and career.

So, I did the only thing that I can do - I called the Taxpayer Advocate, thinking that they would help me. Well, they took my case, but after speaking with the Advocate twice, I'm convinced that they don't know what they're doing. They think my tax debt is not dischargeable because the IRS didn't receive a return - even though I provided them with a stamped copy!!! Am I being obtuse here? Nevertheless, I'm still waiting for their final determination on this, but the Advocate told me that even their office thinks it's not dischargeable, so it doesn't look good for me.

What should I do? Should I expend savings (which I DO NOT want to do) and get an experienced tax attorney? Am I totally off based thinking these taxes should have been discharged? Can anybody recommend a really good tax attorney?

HELP!!!!

Thanks for reading.

[fileda13]

You need to take this to problems resolution. You should definitely get a CPA with a Power of Attorney and not take this on yourself.

[toph80]

Does anybody have a good person to deal with this that they can recommend? The attorneys and CPAs I've spoken to don't want to touch this. The last one I've spoken to says that the IRS doesn't have to discharge debts in a bankruptcy if they don't want to (!!).

I'm looking for somebody good. I have no idea what to do.

[IamOld]

toph80 - that's not true - the bk can discharge tax debt. This is a screwup by an IRS employee - I would even contact your congressman (Ron Paul would perhaps love this just for political reasons).
Re tax atty - you may have to look at a larger firm...more of a "corporate type" firm...

BUT I perhaps naively wonder - if you wrote to the IRS director in DC - certified return receipt - and someone reasonably decent would look at it in his office...
The other question to ask is this - if the IRS received funds from your Trustee...what did they do with that???

If the Taxpayer Advocate comes back to you, I'd try this:

a) you are appealing this because you relied on IRS employee IN GOOD FAITH who was incorrect.

b) by the way - what did they do with all the trustee payments?

[toph80]

They didn't get much from the Trustee. I literally paid almost nothing on this debt. The Taxpayer Advocate that I'm speaking to seems to know less about tax laws than I do - which is scary. They say that their "technical associate" says that my taxes are not discharged because of the fact that they filed a SFR for me. But I reminded the advocate that I faxed a stamped copy of the return, but it's not in the system.

I'm just at my wits' end. I cannot understand how something that should be resolved by a single phone call and a fax can be such a nightmare. It's so illogical.

[newbie2]

Have you tried going in to a local office with your documentation in hand? Sometimes that seems to be the key with the IRS. Speak to someone face to face and hand them what you have.

[toph80]

No, I haven't done that. Perhaps I should look into that ...

[IamOld]

top80 I would concur with Newbie - please try and go to a local office and see if that can sort things out...if not, I would then try the letter to IRS HQ in DC - again, the bottom line is this - you relied IN GOOD FAITH - on a stamped receipt from IRS employee - that IS your case!

And let us know how things go - maybe folks here can help along the way!!!!

[fileda13]

As a CPA myself, all I can say is you should get one. Dealing with the IRS on issues like this without tax law knowledge plays into the hands of the IRS. This sort of case is beyond what a local IRS office or Taxpayter Advocacy can handle.

[toph80]

I understand and agree. I spoke to a Tax Attorney today and says that he's fairly certain he can get them to see the error of their ways - but it might take going to Tax Court to fix it. I am not a CPA, but I am not a dilettante either. I *DO* know that the law is on my side since:

a.) The taxes are 3 more three years old
b.) There was more than two years elapsed from the time I filed the returns (late) to the date I filed bankruptcy.

That should be the end. I put my return in the hands of an IRS agent who gave me a stamped copy, so the mistake is on their end. Now, it's just getting them to see it. That's the trick.

Am I seeing anything wrong here?

[IamOld]

Toph, it's great to hear you found an atty - will you go with him? Hopefully once he gets the case and things start moving, some lawyer at the IRS will be...rational. Remember, government - and/or large bureaucracies don't like to admit that they were wrong.

It may be a bit of a long road, but it sounds like you're in good hands!!!!

[toph80]

Yes, I will go with him, because I was referred to him, and he'd handle everything for free until it has to go to trial, and then he'll charge me. Incidentally, in my previous post ... do I have the bk laws correct? Is there anybody here who DOESN'T think I'm in the right here? I'm looking for other opinions, too. Thanks.

[jetsfan2010]

I wish you the best of luck and hope things work out. I have tax debt, though much less, and while my 13 was recently dismissed and am exploring the realm of a 7, the fact that years later they are now rearing their ugly head to you is alarming.

[despritfreya]

The issue here appears to be whether or not the return was filed and when. You state you have a "stamped" copy of the return. Stamped by whom? What, exactly, does it state?

If you have the official IRS "received" stamp on it then the return was filed. Instead of dealing with the nitwits at the IRS who do not understand bk you need to contact Special Procedures.

This is the Court's official address but no phone number

All Divisions:
Internal Revenue Service (eff. 1/1/11)
Special Procedures Staff - Insolvency
P. O. Box 7346
Philadelphia, PA 19101-7346

I found these for Texas but I do not know if any are good:

Internal Revenue Service
P.O. Box 250, Box 5020AVF
Austin, Texas 78767
(512) 499-5258

Internal Revenue Service
Mail Code 5020 DAL
1100 Commerce Street
Room 9A20
Dallas, Texas 75242
(214) 767-1277

Internal Revenue Service
Special Procedures Staff
1919 Smith
Houston, Texas 77002
(713) 653-3820

Start calling. If you get no satisfaction and believe the taxes met the test to have them discharged you could argue this in tax court but good luck. You will need to reopen your bk and file a complaint to determine the dischargeability of the tax debt.

Hope this helps.

Des.

[justbroke]

Yes, a complaint to determine dischargeability (AP) is probably what this will turn in to. If this was for personal income taxes, then this may be dischargeable if you can prove that you met the criteria (3/2/240). If this was for payroll taxes (941 quarterly, FUTA, SUTA, OASDI, Medicare, etc), then you are out of luck since I believe that these are never dischargeable.

I ask about non-income taxes since I don't know the nature of how someone making $50K a year could have $145K in tax debt, without some sort of capital gains issue. The original post mentions "RO".. I'm assuming is revenue officer. Was that an IRA Agent? What was the stamp on the documentation? So many questions.

SO, that leads me back to Des' excellent advice to re-open your case and file a complaint to determine dischargeability. Nice thing is that you don't have to pay the re-opening fee for this... but a complaint (AP) is going to cost you money. I actually like this option better, but if you lose, it could cost you money. If you win, you can tax the IRS with your attorney fees (pun intended).