Chapter 7 and Federal Taxes

[iamprose]

The IRS will sometimes do this if the only assets with equity in the BK are household goods. It just depends.

Do you think an innocent spouse exemptions would be separate(and not liable to irs seizure) in a jointly filed BK7. Specifically if a spouse tax debts were all from before marriage, if the tax debtor had no assets, is the irs entitled to sieze BK7 federally exempted assts from the innocent spouse. Could it matter if any previous 1040's were filed jointly? Thanks, this has been a very difficult question to find a reliable answer to.

[HHM]

they released the lien based off the bankruptcy discharge?

The IRS will sometimes do this if the only assets with equity in the BK are household goods. It just depends.

[kjg812]

I did nothing to request the lien be released. They sent me the certificate of release in the mail stating the lien had been satisfied

[jetsfan2010]

they released the lien based off the bankruptcy discharge?

[kjg812]

I was discharged back in March. I dishcarged 66k of IRS debt. By the end of March I received a notice that they wanted to go after my unsecure exempt property I called them to see what they wanted and they wanted 10k for the value of the vehicle I exempted. I repsonded that the vehicle was in an accident and not worth anything near that value. She then asked me what thought it was worth and I answered 2-3k. She then asked if I could send in the 3k to which I answered no. At this point she told me that if I did not pay by a certain date that they could send someone to pick up the vehicle. Fast forward to yesterday and I received a letter from the IRS that was a cerftificate of release of federal IRS lien. Does this mean I can sell the vehicle now? Should I also be able to get it removed from my credit report?

[jetsfan2010]

I have learned more about taxes and BK in this 10 page thread then any attorney I have PAID to know this stuff!

[HHM]

So, Can some help me out. I understand the 2 year old rule. My husband never filed the tax return. BUT the IRS sent us a tax bill based off of what they thought the business was worth, and what the taxes will be and we have been paying monthly. So since we've been paying, does the 2 year old rule still apply. Can he still filed even though the tax bill is like 6 years old.

Yes, the 2 year rule still applies, a substitute for return DOES NOT count as a filed tax return for purpose of the 2 year rule. So, if your husband never filed the return, the tax is not dischargeable.

[nikkiheaven]

So, Can some help me out. I understand the 2 year old rule. My husband never filed the tax return. BUT the IRS sent us a tax bill based off of what they thought the business was worth, and what the taxes will be and we have been paying monthly. So since we've been paying, does the 2 year old rule still apply. Can he still filed even though the tax bill is like 6 years old.

[HHM]

The IRS lien gets in line behind the mortgages, so the IRS will not get anything.

The IRS is right, you will need to wait to discharge before applying for an OIC.

[Sariah]

I am pro se in ch 7. Shortly after my bk filing, I received a letter from IRS I owe approx $16K from 2009. I want to try an OIC, however, I was told by the IRS that I have to wait till after my bk is discharged to apply. I am in the middle of a loan mod for my house, and if I do not get a decent one whether before or after the discharge I will walk away from the house. From what I read in a previous post, I assume the IRS has an automatic lien. If that is true, and I walk away, would they take the $16K from the house would I still apply for the OIC?

[HHM]

Having a balanced owed may kick you out of non-collectable, but you can probably just reinstate it. Even though non-collectable is not permanent, for all intents and purposes it is.

[alltappedout]

HHM
thanks for the reply. Actually, I'm taking early (age 62) Soc Sec because I can't seem to find work in graphics field (print not web), which I understand is exempt from judgment/levy, but not from IRS. My only other income is from some contract work which has dropped off in the last month. The judgment and lawsuit represent the bulk of my debt ($20,000), so would expect a judgment only from this second lawsuit just served on me. It is a local credit union and I fear they may move more quickly than the CapOne lawyers.
Emotionally, I was so ready to just move on, that I was taken aback by the suggestion of waiting another year.

alltappedout

ps: IRS has me on uncollectable list for now due to hardship; nothing official but they are not dunning me. If I understand your posts, they have a lien on my assets automatically by law? And, I have just filed 2010 with a balance owing of $951 which I am unable to pay.

[HHM]

That's a long time to wait for $7K. However, whether you should wait is situation specific. Even with attorney letters, the creditors can still get rough and it won't stop one from suing you. Unfortunately, you are right on the cusp, if you wait, you could very likely end up in a situation where your only a couple months from getting the the taxes discharged (lets say Jan 2012) and you are facing a garnishment from another creditors, then forced to file. Since you already have one judgment against you and one about to come, probably just file.

If you have steady income and your finances are otherwise stable, $7K can be worked out with IRS pretty easily (36 month payment plan, no questions asked).

[alltappedout]

Have contacted and retained a lawyer for Ch7. I owe approx $7k to IRS from 2008 and lawyer is suggesting I hold out on filing BK until April 2012 in order to discharge. Anyone have experience or advice about waiting? Good idea? Bad? worth it?

In meantime, he will send creditor letters to stop them from continuing to contact me. I have one judgment and one summons (which I have not responded to within the 30 days). Will the letters to the lawyers stop any further action by them, too?

Appreciate any help from those who have traveled this road before me. Thanks.

[NSH]

So, if you owe $50,000 in dischargeable taxes, and the IRS filed a lien, and your combined assets have a value of $10K (remember, exemptions don't apply), then you will emerge from BK still owing the IRS $10,000 even though the taxes are dischargeable.

Ah, I think I see. In other words, if I owe say 100K (which is about accurate, by the way) and my BK filing shows my household assets as 10K then I would discharge 90K but still owe 10K?

But, if I do a motion of value (whatever that is) AND I call the IRS insolvency division and get them to release the lien, I would then owe nothing?

Thanks for the answer, by the way!

Oh one more question: Someone posted in the forum (I think it was in this thread) that they were audited after filing BK by the IRS. Am I basically inviting an audit or increasing my chances of being audited if I file for BK, particularly if I am getting my taxes discharged? It seems that the IRS might be using the audit to re-assess more taxes as a means of changing the look-back time (if I am using the right term) to try to catch unsuspecting BK filers if that is the case.