IRS Collection

[TAGar]

Need some guidance. I'm a pro se debtor in a Chap. 13 case with a Plan just about to be confirmed. The IRS has seized my 2007 income tax refund (filed after the Petition) and says that the law permits them to do so. I have asked for the reference to the law which permits this but they have not been able to tell me. Also, they recently sent a letter to my employer re: a tax levy on my paycheck. So now I really don't believe they know what they're doing? Any advice or guidance would be appreciated.

Thanks.

[biotechsolution]

If they had filed a 'right to setoff' they very well could have the right to sieze your tax refund. Even if you're in a chapter 13 any refunds most likely would be taken by the IRS.

But the levy shouldn't be happening. Once you file for Chapter 13 protection it stops all levy activity. Inform you local IRS insolvency office that they are involation of the automatic stay and could be subject to sanctions for violating it. Are the taxes that they are trying to levy for pre-petition or post-petition??

If they are post-petition it shouldn't matter because I would think they would have to wait until you are no longer under the automatic stay protection of the chapter 13.

[TAGar]

They filed a Proof of Claim listing the entire tax debt. They haven't filed anything else. The taxes are pre-petition taxes listed in the filing. I don't understand why I would bother to repay them in the Plan if they are going to seize returns each year. As for the payroll collection there have been numerous phones calls and at least 2 ltrs to the IRS over the past 60 days advising them of the bankruptcy filing. I was wondering if sanctions could be imposed and what I could ask for. It's ridiculous.

[HHM]

I concur, the payroll levy should not be happening, but since the IRS has a defacto lien on all refunds for unpaid taxes, they can probably still take the refund.

[biotechsolution]

You could try typing up an adversary proceeding for violations of the automatic stay. You local bk court should have the 1 page form for filing an AP. It isn't too involved. Type out your motion charging the IRS for violations of the automatic stay.

You won't get sanctions from the bk court because they require you to go through all the adminstrative avenues through the IRS first but it will get the IRS to notice because court actions from the bk court will move your case from the insolvency group to district counsel.

In addition you should file form IRS 9423 it's a CAP request. They are required to address the situation within a set time period. It might be your best option other than filing a AP.

[bkdone]

Dont know if this helps, but I was audited while we were in Chapter 13 BK for the year prior. We owed $2K after the audit, and I sent a letter telling them I couldnt pay it since we were under the BK plan...no extra money. The $2K was wiped out and I got a letter saying that because we were under BK for the year that the $ was owed, we did not have to pay it. You coud try it...

[krielly]

These inconsistencies drive me nuts!

We also included IRS debt in our 13, but the IRS has never taken any of our refunds, as they were being paid through our plan.