bw4444
03-14-2006, 01:29 PM
Between my BK lawyer and Accountant, I lived under a misunderstanding about Fed taxes included in BK. Fed taxes older than 3 years at time of filing can be discharged, but there are lots of rules covering this. Mine were discharged.
My unpaid Fed taxes newer than 3 years at time of filing were included in the BK. The IRS filed a claim and I thought everything was OK.
I was surprised months later to be getting collection notices from IRS. Since the BK took my house (ouch--what a miscalculation), there was money to pay the taxes, which were accepted as a priority claim--that is, the front of the line. The money was there to pay the taxes. So, after I got the notice, called the accountant and he spoke with the IRS who indicated that they'd wait for the trustee to pay out. Got no more notices or phone calls.
4 months went by and lo, my bank account was hoovered by the IRS. Hundreds in Overdraft and NSF fees started rolling in.
Filed hardship forms with the Taxpayer Advocate (TA) to get the money released back to my account (you have 21 days), but haven't heard back in a week since submitting the forms. One week to go before my 21 days are up and then I'm ******.)
In talking to TA, it appears IRS won't pursue collections with a BK Trustee. (Well, duh! I wasn't asking that. Only to wait to him to pay out.) Also, why didn't they tell me they really weren't satisfied with waiting for the trustee to pay out? According to the TA, once a collection hold (which they did while waiting for the trustee to pay) is put on your account, they don't talk to you, don't contact you. When the collection hold is off, they shoot, then talk. What's more, if you think that when the trustee finally gets around to paying out that the IRS will be satisfied, you're still missing something. Interest and penalties have been accruing. The BK doesn't stop this.
If you owe significant back taxes to the Feds, you might want to think twice about your BK. If you have any assets, better to sell them yourself to pay off your debts--taxes first--than to have the BK court sell them. You wouldn't believe what a huge share of your assets the Trustee gets!
Lessons learned:
The IRS is just another CA, but with Super Powers. The state revenue dept is just like the IRS, but without all the compassion and they have even more super powers.
They don't give a **** about your BK. Your situation is meaningless. They still pursue collections like your BK never happened. Just because the IRS files a BK claim doesn't mean they're going along for the ride.
I got suckered by what I was told on the phone. GET IT IN WRITING!
Shame on me for not forcing my lawyer and accountant to be really clear about this stuff in the beginning. I had such a hard time getting some kind of expectation about how long it would take to get the trustee to pay out. Let me set it for you: A LONG TIME. Maybe a year, maybe 4 or 5 years. I know someone who just got a payout from a BK filed in 2000!
Better to sell stuff, pay back taxes & other people off, wait the required time and then file. Trustee and Trustee's lawyer make a TON off an asset filing. Filing a no-asset BK is much, much simpler.
Thanks for letting me rant!
bw
My unpaid Fed taxes newer than 3 years at time of filing were included in the BK. The IRS filed a claim and I thought everything was OK.
I was surprised months later to be getting collection notices from IRS. Since the BK took my house (ouch--what a miscalculation), there was money to pay the taxes, which were accepted as a priority claim--that is, the front of the line. The money was there to pay the taxes. So, after I got the notice, called the accountant and he spoke with the IRS who indicated that they'd wait for the trustee to pay out. Got no more notices or phone calls.
4 months went by and lo, my bank account was hoovered by the IRS. Hundreds in Overdraft and NSF fees started rolling in.
Filed hardship forms with the Taxpayer Advocate (TA) to get the money released back to my account (you have 21 days), but haven't heard back in a week since submitting the forms. One week to go before my 21 days are up and then I'm ******.)
In talking to TA, it appears IRS won't pursue collections with a BK Trustee. (Well, duh! I wasn't asking that. Only to wait to him to pay out.) Also, why didn't they tell me they really weren't satisfied with waiting for the trustee to pay out? According to the TA, once a collection hold (which they did while waiting for the trustee to pay) is put on your account, they don't talk to you, don't contact you. When the collection hold is off, they shoot, then talk. What's more, if you think that when the trustee finally gets around to paying out that the IRS will be satisfied, you're still missing something. Interest and penalties have been accruing. The BK doesn't stop this.
If you owe significant back taxes to the Feds, you might want to think twice about your BK. If you have any assets, better to sell them yourself to pay off your debts--taxes first--than to have the BK court sell them. You wouldn't believe what a huge share of your assets the Trustee gets!
Lessons learned:
The IRS is just another CA, but with Super Powers. The state revenue dept is just like the IRS, but without all the compassion and they have even more super powers.
They don't give a **** about your BK. Your situation is meaningless. They still pursue collections like your BK never happened. Just because the IRS files a BK claim doesn't mean they're going along for the ride.
I got suckered by what I was told on the phone. GET IT IN WRITING!
Shame on me for not forcing my lawyer and accountant to be really clear about this stuff in the beginning. I had such a hard time getting some kind of expectation about how long it would take to get the trustee to pay out. Let me set it for you: A LONG TIME. Maybe a year, maybe 4 or 5 years. I know someone who just got a payout from a BK filed in 2000!
Better to sell stuff, pay back taxes & other people off, wait the required time and then file. Trustee and Trustee's lawyer make a TON off an asset filing. Filing a no-asset BK is much, much simpler.
Thanks for letting me rant!
bw