Asset case, IRS, and non filing spouse

[kerril]

Asset case discharged in June. Bought back assets which lawyer says will be used to pay 2014 taxes as they are a priority. Trustee filed notice of sale in October but has not filed the distribution report yet. We received tax bills with both names, the lawyer contacted the IRS and told them they cannot send bills because of BK. Now IRS is sending bills to only the non filing spouse and threatening to place a lien.. Called and spoke to the IRS and they claim "there is a note on the account that because of the BK they cannot file a lien". But the bills and notices continue to come via certified mail. Non filing spouse obviously does not want a lien and the lawyer is saying we just have to wait. Is this right? There is nothing the lawyer can do while the non filing spouse is being harassed by the IRS? I don't know that I believe the "note on the account" because the threats keep coming. Can anyone advise?

[AngelinaCat]

Upon Discharge, you should have received a notice to contact the IRS to reinstate your payments--if you were making any. If you haven't been making payments, you need to call and set up a payment plan. 'Hub and I have been doing this for years. The people on the phone are actually very nice and helpful. This is the only way to get your non-filing spouse to be left alone.

BTW, it may take a year or more before your Asset Case closes. We were Discharged August 2008, and the case didn't close until November 2009. Then it took another year before our incompetent lawyer told us about it. But we knew already because of PACER.

Good wishes to you~~

[despritfreya]

I'm with Cat. Once the discharge is entered the taxing agency is free to attempt to collect. It does not need to wait for distribution by the Trustee. It may agree to delay collections but it does not have to.

Depending upon how much $$ the Trustee is holding, it may be worth discussing with him/her the possibility of seeking an early distribution to the taxing agency due to the continued accrual of interest that will not be paid by the bk estate.

Des.

[kerril]

So basically we have to, or try to get our lawyer to, do an early distribution to pay the IRS? That's what I thought. I will have to get DH to put some fire under the lawyers behind. The lawyer told us not to pay 2014 taxes as they will be paid by the trustee but like I said, it's taking FOREVER and I'm sick of getting threats from the IRS. Thanks for the advice!

[AngelinaCat]

At this point, I would contact the trustee's office myself. Your attorney is essentially through at this point, and to him/her, the matter is now in the hands of the trustee. We ended up having to do this ourselves--but for something else, not taxes.

[despritfreya]

Please understand that my suggestion only works if. . .

A. The Trustee agrees

B. There is sufficient funds being held by the Trustee to cover the claim AND his fees, including his attny fees if he hired an attny.

While your attny can request this action, you cannot force it.

Here is language from a Motion filed in a specific case that had substantial assets:

John Doe, the duly appointed Chapter 7 Trustee herein (the "Trustee"), by and through his counsel undersigned, hereby requests the Court to authorize the Trustee to pay certain priority tax claims asserted by the Internal Revenue Service. In support of this Application, the Trustee asserts as follows:

1. On January 1, 2014 the Debtors filed a Voluntary Petition under Chapter 7 of the United States Bankruptcy Code.

2. On January 1, 2014 the Trustee was appointed as the Chapter 7 Trustee.

3. The Internal Revenue Service (the "IRS") filed an initial proof of claim and several amendments thereto for pre-petition income taxes owed by the Debtors (the "IRS Claim"). The Trustee proposes to pay the priority portion of the taxes and related charges owed for tax years 2011 and 2012. Accordingly, the Trustee requests Court approval to pay the actual amount of priority taxes and related charges due for tax years 2011 and 2012 which, based upon the Proof of Claim, is not less than the total amount of $98,352.29.

4. The portions of the IRS Claim which the Trustee proposes to pay are priority claims under 11 U.S.C. §507(a)(8) and the payment of such claims at this time will benefit the estate.

5. At this time, the Trustee submits that there are sufficient assets in this estate to allow for the immediate payment of the IRS Claim as described herein without prejudicing other administrative and priority claims.

6. In the event it is determined in the future that there are additional administrative claims or other priority claims which cause these payments to the IRS to be overpayment of its claim, the Trustee will file an appropriate motion to recover any such overpaid monies from the IRS.

WHEREFORE, the Trustee respectfully requests an order of this Court authorizing and directing the Trustee to utilize unencumbered estate funds to immediately issue payment to the Internal Revenue Service in the sum of not less than $98,352.29 in satisfaction of its priority tax claim for tax years 2011 and 2012 .

Hope this helps.

Des.