Help! California FTB sent me a POST BANKRUPTCY NOTICE

[bkDude]

Does anyone know what to do with a POST BANKRUPTCY NOTICE that is demanding money (about half the original) when they were included in the Bankruptcy and it was discharged?
The letter states that it "was not discharged".
I Filed Pro-se for BK in Colorado, and notified FTB (California Franchise Tax Board) along with everyone else.
The CA Tax Debt is about 10 years old.

Any ideas?
Thanks,
bkDude in CO

[debee]

So long as you filed the returns at least two years before filing your bk, and none of the tax was assessed within 240 days of your filing and there was no fraud or attempts to evade the tax then it should be discharged. Were they income taxes? Or sales tax?

What reason do they give you in the letter?

[HHM]

What sort of "Tax" are we talking about...FTB tends to deal with business type taxes. If the tax is related to tax withholding etc, then it is, in fact, NOT discharged.

[debee]

In CA, the FTB is plain old personal income tax too.

[bkDude]

The "taxes" are just personal CA State income tax.

I do not have any idea whether I even filed properly for the year in question. It was 1999 (according to the form they sent).
The "Codes" on the notice refer to not filing not on time or not at all, which may be true... I do not remember.

@ debee "So long as you filed the returns at least two years before filing your bk"
What is that about and where might I find documentation of it, Fed or State?
Since I probably did not even file for the year in question, does that mean I have to pay anyway?
Thanks,
bkDude in CO

[HHM]

If you did not file the tax return, then the tax liability is not discharged. As such, you will need to pay, plus all penalties and interests (or otherwise work something out with CA-FTB)

As for whether the return was filed, all you can do is contact the FTB and see if it has a "filed" return on file. Since there is a "tax assessed", that means someone did a return. I don't know about CA-FTB in particular, but the IRS will file a substitute for return if the tax payer has not filed a return voluntarily (usually after about 3 years) so a tax can be assessed and collected. FTB probably has the same procedure; however, before you ask, no, a substitute return does not count for the 2 year rule.

[debee]

@ debee "So long as you filed the returns at least two years before filing your bk"
What is that about and where might I find documentation of it, Fed or State?
Since I probably did not even file for the year in question, does that mean I have to pay anyway?
Thanks,
bkDude in CO

In order for tax debt to be dischargeable in chapter 7 bankruptcy it has to qualify. One of the qualifications is you have to have filed the return at least two years before your bk. This is all spelled out in 11 USC 523.

If you did not file the return in the right time frame, then as HHM explains, the debt is not dischargeable. Sorry.

[bkDude]

Ah Yes... Now I remember reading that section. I just knew I could not wait 2 years to file the BK... Bummer.
I will likely have to pay it after all.
Interestingly, they lowered the amount by half of what it was pre-BK so at least they aren't kicking me too much while I am down.
I called them and they confirmed that it was because of lack of filing, and they appear to be willing to make payments as well.
So all-in-all not as bad as it could have been.

Thanks for the info. Ya'll have been an excellent help and resource throughout the entire BK process.
Thanks Again!

bkDude in CO

[HHM]

Ah Yes... Now I remember reading that section. I just knew I could not wait 2 years to file the BK... Bummer.
I will likely have to pay it after all.
Interestingly, they lowered the amount by half of what it was pre-BK so at least they aren't kicking me too much while I am down.
I called them and they confirmed that it was because of lack of filing, and they appear to be willing to make payments as well.
So all-in-all not as bad as it could have been.

Thanks for the info. Ya'll have been an excellent help and resource throughout the entire BK process.
Thanks Again!

bkDude in CO

Actually, I need to correct myself...you shouldn't have to pay the penalties nor the interested associated with the penalty. Reason being, the penalties get discharged so long as the event that gave rise to the penalty occurred more than 3 years ago. (This is 523(a)(7) at work). For example, if the penalty is for "failure to timely file tax return", well...your failure occurred back in 1999 when the tax return was not received, since that was more than 3 years ago, the penalty is discharged even though the underlying principal tax is not.