Chapter 13 & IRS taxes and State taxes

[jcaustin1]

I am looking at filing chapter 13 to stop IRS collection. I know this is a priority Debt, The debt was incurred as a result of losing my job, and I had a large 401K loan for my children's college expenses. I found a new job, but the company is in trouble and I had to take a 50 percent pay cut. If I take the balance I owe the IRS & The State of New York and divide it by 60 months their is no way I can pay that amount. Does the IRS ever take Less than 100%

Thanks for any comments.












d

[justbroke]

First, you have to find out what part of yoru IRS debt is priority debt and which part is general unsecured. The IRS tax debt is divided into two parts. The actual IRS liability (what you owed) plus the interest on that amount. The other part is the penalty amount (plus the interest on the penalty amount). These two are known as the priority unsecured debt and the general unsecured debt, respectively.

As you know, the priority part you need to pay back in the 60 months. The general unsecured debt, is paid pro rata based on your disposable monthly income.

What I'm saying is, you need to pay the IRS back less than what you think.

[optimistic1]

Thanks for the tip JB, I never knew that.