post petition tax debt

[grndmom53]

Ok, originally we started out on a payment plan with the IRS for post petition taxes in 2010.. we payed on that for about 18 months. We then recv a phone call from IRS that we couldn't be in a payment plan because we were in a 13 & just send money in if we could but no need to send monthly payments anymore! we should of just continued to send in the $100 a month but we were trying to set up an emergency fund so we stopped!

Fast forward to late 2012, we recv another letter saying we need to set up a payment plan! So I called them & we are back to making payments, now at $200 a month! I don't understand it, but it needs to be paid so we are making the payments!

[spidge]

I was told by the IRS that I could not enter into a payment plan from post filing tax while in the BK13, but to just send in money when I can. I have only sent money once in the last two years and one federal refund was held to offset.

[jmac]

Thanks

[despritfreya]

I. . . will (owe) about 2500 bucks. I have saved up money over 3 years so i think im just going to send in the money to the IRS instead of getting trustee invloved...Think i will get in trouble for this?

Absolutely not. Pay it.

Des.

[grndmom53]

We are in Az & only 3 months left in our chapter 13. We also have taxes due which occurred after we were confirmed. we have an agreement with the IRS to pay $200 a month which we have been doing since 2012. We owe about $2500.00.

We also had taxes in our 13 which are now paid off. I hope this doesn't cause a problem when our plan is completed.

[jmac]

I got a little situation this year, I'm going through divorce after being seperated for a 3 years and in my 3rd year of my 13...Everything has been good tax wise when i have filed with my ex. This year i guess she must have a boyfriend or something and has become bitter, so she told me this week she wasnt filing with me( which makes no sense she is on disablity) which will put me owing about 2500 bucks. I have saved up money over 3 years so i think im just going to send in the money to the IRS instead of getting trustee invloved...Think i will get in trouble for this? This is in california.

[justbroke]

p.s. lucky dog , being in Fla you probably dont every worry about AMT from big state income and local property taxes. we're moving in a few weeks and our federal taxes will go up but our expenses will go down by more.

I was hit by AMT when I owned 2 properties and in bankruptcy. I was deducting over $70K a year alone on my Schedule A while in my Chapter 13! I did surrender one property, so I only got hit 2 years. (It was the arrears which was all interest anyhow.) That made me hit AMT minimums. I was shocked!

[despritfreya]

What if it is a tax return for the year you filed??

Because such tax is post petition (it's due the following year) and the case is so new, depending upon how much it is, you could either seek a waiver of Plan payments for a few months to free up the $$ to pay it or you could seek to have it added to the Plan as a "1305 claim".

If you go the waiver route the missed payments have to be made up somehow. Typically you would increase the payment slightly over the remaining months of the Plan when payments resume. If you go the route of adding the tax as a 1305 claim, Plan payments would likewise have to be adjusted to cover the additional funding.

The problem comes when you consistently owe money each year that you cannot pay. Allowing the tax debt to snowball is a problem.

Des.

[mmptysmom]

What if it is a tax return for the year you filed??

[catleg]

just noticed this edit...too funny... i guess i really do ramble...stream of consciousness...also maybe too much dopamine!

Last edited by AngelinaCat; 01-18-2014 at 04:50 PM. Reason: Trying to make a long post easier to read.

[catleg]

True, JB, the bee in my bonnet over this issue is how creditors can inadvertently benefit when the debtor doesn't fully understand his tax situation.. In the case of my wife and I we were being fully withheld by our employers on W2 and yet every year I would owe money , not understanding why. Well, as it turns out, and I only figured this out after some serious spreadsheet modeling, the culprit was AMT. We had falied to account for AMT in our taxes every year and thus our plan payments should have been lower taking taxes into account. At some point you just shrug and hope that you took advantage of enough other tricks to offset the slippage on that item. ( I missed it partially because my salary had stepped up with a commission plan when i went from programming into pre-sales and the commission calculation was so rough we never hit 100% of plan more than once or twice semiannally --remember his was 2008-2009--so I was obsessed with those bonuses. I ended up timing the 6 month lookback to get my income down to a reasonable level--in retrospect I should have just specified the bonus amount as something I would give up since i hardly ever saw any of it. But between taxes and pre-tax and after tax 401 k contribution it was quite a process.)
my neutron bomb if things ever went badly was to do a roth conversion on all our pre-tax retirement money and use the resulting tax debt to blow out the ch13 and convert to a 7 or else refile a 13 with a plan that would pay everything to taxes.. that probably would have made some kind of BK law journal. Sssh I shouldn't tell you in case i ever get back there again! no, just kidding, would never do it again, put my poor wife through enough
regards,
catleg

p.s. lucky dog , being in Fla you probably dont every worry about AMT from big state income and local property taxes. we're moving in a few weeks and our federal taxes will go up but our expenses will go down by more.

[justbroke]

catleg, Des specifically addressed the "step down" plan. The problem is that the unsecured creditors are harmed by the debtor's post-petition actions. If the tax debt had been pre-petition, that could be a different story. However, attempting to Modify a Confirmed Plan to decrease the payments to unsecured creditors is almost a non-starter. It would be the Trustee complaining the loudest, especially if that amount is not paid through the Trustee thereby decreasing the Trustee's commission (up to 10%) for managing the Chapter 13 Plan of Reorganization.

At least that's how I would act if I were the Chapter 13 Trustee. Remember, this is a post-petition issue. The pre-petition creditors should not have to suffer.

[catleg]

Good points Des you are always the definitive source here.
Just wondering if the OP might get into an IRS payment plan and then have his ch13 trustee plan payment adjusted to subtract the tax payment..kind of like a "step down" plan.
My reasoning being, the creditors paid in the plan benefited by his underpayment of taxes (increasing the dividend), therefore, they would not be unduly burdened by the repayments to the IRS for taxes unpaid.
But whatever, glad you are so close to the end of a ch13 and are actually getting a benefit from it (lien strip).
I was in a BAPCPA forced ch13 due to high income but converted to ch7 based on my income becoming exempt due to disability. (using state exemptions instead of Federal)

[patieboy38]

Thanks Des.

[despritfreya]

Does the trustee actually seek financial status of the debtor before allowing discharge? Will they want to know if I have any post petition debt? (taxes?)

Not that I am aware of. Trustee simply verifies that all the terms and conditions of the Order Confirming have been met. Once that is done he/she files his/her report of a completed and paid out case. In my district the debtor must then "certify" that he/she is entitled to a discharge. One of the things the certification states is that all domestic support payments have been made. There is no mention of payment of post petition taxes or any other type of post petition debt (other than support).

Des.