IRS post petition taxes - I had an installment agreement but now it's suspended

[sophieanne]

Sorry - this is the correct post. I guess I hit a wrong button and posted the one with typos also....

Hi everyone,
I filed 13 in 2012 and unfortunately at the end of 2013 I had a 3000 tax bill due. I couldn't afford to pay it all at once so I spoke to the insolvency department at the IRS and to the liason between the IRS and
the trustee from the IRS. I was told they would set up a payment installment agreement. I've been paying my payments like clockwork for the past year.

I called yesterday to ask a general question and was told, by the way you're installment agreement has been suspended for the duration of time you're in Chapter 13. I was told by 2 reps (yesterday and today) that it was ruled that the IRS cannot have installment agreements with those in Chapter 7 or 13 as it could be perceived as violation of the automatic stay. I was surprised. I was told i could make voluntary payments if i like (which i will do) until my 13 is complete. I asked what happens if I don't make voluntary payments. Response nothing - interest accumulates. I would never do that.

U was if the understanding (and per the words of the IRS when I set up the installment agreement) that post petition tax was my responsibility and not part of the BK. As such an installment agreement was ok.
Does anyone know why this would be changed??

Per both reps, this is a ruling that came down a couple weeks ago and they are now working to contact those of us in 13''s who set up post petition installment agreements.

I should e getting a letter shortly that explains the situation and ells how to make voluntary payments (if I choose to). I said I received my April 30 invoice for payment just a couple days ago, The response was until my bk is complete, I won't be seeing another one.

Does anyone know anything about this or have this happen recently?

[dmc-2008]

I can't answer you questions but I think you are wise to continue to pay because of interest you don't want to mess with irs. :-)

[justbroke]

This is a brand new, hot of the presses ruling from the IRS. The IRS is trying to avoid violating the automatic stay in a Chapter 13 and must have been burned too many times by collecting against "property of the estate" in the post-petition Chapter 13 world of bankruptcy.

The IRS actually does have post-petition authority to take certain acts, but they must obtain leave from the bankruptcy court (relief from the automatic stay), in order to pursue post-petition collection (such as a levy). I'm guessing that in many cases, it's not worth the IRS' time and effort (and money) to go after small (don't ask me what "small" is) amounts of money by filing motions for relief or motions for modification of a confirmed plan. (In fact, the IRS admits that they are not too successful at seeking a modification of a confirmed plan.) The IRS Memorandum seems to have some $2,500 cut off for certain actions, but I'm no tax specialist so I don't know the impact of having post-petition liabilities over $2,500.

This is both good and bad news for debtors. If debtors don't calculate the penalties and interest and pay those during the Chapter 13, they could end up with a big bill at the end of their Chapter 13. Not to mention that the IRS, as soon as the Chapter 13 is dismissed or discharged/closed, will pounce and start their favorite; levy actions.

The real way to deal with this, if your plan just began, is to seek a modification of the confirmed plan and allow this as an administrative expense or a priority debt.

The IRS Memorandum SBSE-05-0315-0033, is dated March 2015. (An "IA" is an installment agreement.)

In the past, taxpayers in specific bankruptcy court jurisdictions were granted an IA on post-petition liabilities while they were in Chapter 13. In order to avoid the potential for a violation of the bankruptcy automatic stay, this practice will be discontinued. The below guidance is being provided to address this circumstance, and is also being provided for closing actions when the IRS already granted the debtor an IA for post petition liabilities and the taxpayer had a pre-petition IA.

Sophie, you may get a IRS letter L-2272-C, Installment Agreement Cannot Be Considered or some other form letter.

(No, I have not received such a letter and you're the first to mention this new ruling!)

[sophieanne]

Thanks Justbroke...it makes me feel better when I get confirmation of this from someone NOT at this IRS.
Since I'm 3 years + in to my plan, I'll just going to keep sending the monthly amount we agreed to. I'm in a 100% plan and
don't want to mess with my plan.
Thanks again and HAPPY FRIDAY!!!!!

[jmac]

I just got lucky i owed the IRS 3k from my second year in BK and they asked for it and trustee agreed to pay it with only 5 payments left. I only owe 2k now since i sent in money when i could but will be nice to not have to deal with it in a few months.

[spidge]

Well I filed back in 2010 and owed from that very year, but the IRS was always clear about my post filing tax in that I could make payments at will and not need to commit to a specific installment agreement. I only made one or two payments but instead paid extra in withholdings and they kept the refunds from my tax filings. Worked out great as I am now tax and 7 payments from debt free.
I know this is more technical than what applies to my case, but that was my way out.

[sophieanne]

I just got lucky i owed the IRS 3k from my second year in BK and they asked for it and trustee agreed to pay it with only 5 payments left. I only owe 2k now since i sent in money when i could but will be nice to not have to deal with it in a few months.

Hi jmac,

Just curious when that happened. And who asked the trustee to pay the tax bill..you or the IRS?? Thanks

[jmac]

The IRS did....