Bankruptcy and the IRS

[down @ out]

I filed for bankruptcy in October of 2005 and was discharged in March of 2006. I had an IRS component of the Bankruptcy that was to the tune of about $6500.00. I was unsure if the amount would be discharged because of the closness of one of the parameters in determining whether of not the debt would be discharged.

Anyway after recent phone calls to the IRS I was told the amount was to use their jargon abated. Hopefully it stays abated. I was told on two occasions previous to these last calls it was and two times it was not. One can only hope the recent phone calls are the end of it. I made 2 and got two different people and they both said it was abated.

Anyway my question is the discharged occured in March. In may the irs grabbed my refund in the amount of 200.00 and applied it to the tax bill. It seems to me they owe me the money back since the discharge was in March and therefore in may the debt was not owed. It really isn`t my problem that they didn`t work this out till July.

Any thoughts would be appreciated.


thanks

[Princesskina]

From the Nolo book I read on this specific topic you may need to go to court and have the IRS honror the discharge also make sure the discharge included the taxes because from what this book saids something about it only being dischargable if the taxes owed are at least 2-3 years b4 u file.

[SinkingFast]

Recent IRS tax debt cannot be discharged. As Princess said, the debt has to be older in order to be discharged in BK.

Abatement simply means you have not continued to accrue penalties and interest. At that, you would have had to complete an official form with the IRS to receive an Abatement.

http://www.nationaltaxrelief.com/penalty_abatement.htm

If the tax debt was recent, you still owe the IRS money. Every year that you get a refund, the IRS is probably gonna sieze the money and you won't get a check or Direct Deposit.

[down @ out]

Thanks for the help.

When I spoke with the IRS reps they both used pretty much the same language but were very specific to the point that the entire debt had been wiped out and the balance from the two years was zero.

Not sure how things work today but under the old bankruptcy laws a lot of tax debt can be wiped out. The debt must have been for taxes over three years old, the irs had 240 days to collect it and one other critera. Basically my taxes were from the 1998-1999 time frame. So the only thing there was any question on was the 240 rule.

I had taken the irs to tax court, lost and that was the only close one in the bunch.

Basically then I believe I maybe home free and clear I just want to get the tax refunded to me.

I imagine if the irs changes its mind I will haul their ass into bankruptcy court and have the whole thing re-opened. Do you know those jerks were trying to seize my checking account while I had an offer in compromise pending? And let me say I am not a bandit but just a normal guy.

Thanks,

[SinkingFast]

Oh, I didn't think you were a bandit.

And I'm sorry for not thinking about you being Old Law vs New.

Many of us here have had go arounds with the IRS.

We dodged having to dance with Uncle Sam by selling our truck. We owed $8100 for 2005. I read up on OIC's and IRS Tax Liens and realized we didn't wanna deal with that. So we sold our truck and used the proceeds to pay our tax debt.

We didn't wanna come out of BK and not be able to get Credit at all. And that's pretty much what happens when you have an IRS Tax Lien against you. Nobody will lend money to you.

We cashed out a Retirement IRA to pay off the 2nd on our house getting it ready to sell. Doing the right thing. Trying to pay our bills. A lot of good that did us.

We wound up owing the IRS big time, sold our truck to pay that bill, went into Foreclosure with the house, and barely sold for what we owed on the first, plus costs to sell.