Back Tax Question

[DaisysMom]

I owe both State and Federal back taxes of approx. $4K for the last two years. Will that force me into a Chapter 13 with a payment plan or will I still be able to proceed with Chapter 7? And could the interest and penalties be discharged making the payback a little easier?

D...

[MomIcantFindmy]

We oweded back taxes and went through with our 7. We just had to arrange to pay those through the IRS. They filed like every other creditor but we had to set up a payment plan with them.

[HHM]

If the taxes are that recent and that small, you probably don't have much in the way of interest and penalties in the first place.
In any event, in a chapter 7 the Penalties and Interest follow the tax...if the underlying principal tax cannot be discharged, than the pre-petition penalties and interest, likewise, cannot be discharged.

The debt is not what determines whether you file a 7 or 13. Now, it might be in your best interests to file a chapter 13 and pay the IRS through the plan as a priority debt. But given the amount of tax, I would not recommend that strategy.

As was previously stated, you would simply work out a resolution with the IRS after the chapter 7 discharge. In your case, you would request a Guaranteed Installment Agreement and make monthly payments for no more than 30 months.

[DaisysMom]

WHEW!! Thank You. I am trying to think of everything prior to meeting with my attorney on Jan. 8th.

D...

[willsurvive]

HHM is right on. We owe around $2200 of employer taxes (we owned a small business) plus penalties and interest. Anyway, we are expecting a small refund since my dh has employment and we have requested the IRS to take the refund first (the trustee would get it anyway) and we will pay the difference in installments.

Good luck.