BK & the IRS

[rhiannon65]

What is the name of your state? Illinois

Thank you for taking the time to read and hopefully respond...

in mid-99, I quit my job, sold the ESOP stock and bought a house in May 00.

We forgot (!) to file income taxes that year, have filed every year since, but didn't in 2000 for '99.

The IRS has been keeping any refund we had been entitled since that year and we received a certified letter today telling us they were prepared to levy against our property and assets. Our car is not paid for, and neither is our home (it's a mobile home), and neither are worth the payoff value of the loan/mortgage. The only assets we have are clothing and household items and live paycheck to paycheck (no savings).

We were thinking of filing BK last year, but didn't have the money to do it, and are thinking of doing it now (we'll scrape it together somehow - want to do it before the laws change).

Can the IRS be included in the BK? Should I contact them first to see if we can get a settlement of some kind and make arrangements to pay that reduced amount? I really need some guidance. The amount the IRS is claiming is over $70,000, my income is under $40,000 and my husband stays at home with the kids, but due to their mixed schedules (son is on a regular school schedule, 8 yo daughter goes year round, 9 wks on, 3 wks off), he has a hard time finding part time work.

Any advice?

Thank you.

[Ladynred]

Can the IRS be included in the BK?

Yes, but there's only 1 problem - back taxes can NOT be discharged for a return that was never filed. Whatever you owe them, it won't be discharged in bankrutpcy.

The FIRST thing you need to do is get the papers for the 1999 return and FILE THE RETURN. The IRS doesn't have any of your papers for your deductions nor numbers for taxes you paid in. Once you file the 1999 return, the amount you owe will change, but you'll still owe some penalties.

I suggest you find yourself a taxpayer advocate in your area, they work for free or on a sliding scale based on income and they are there to help with issues like this. These people know their stuff and can help you work with the IRS and likely get you thru a settlement if that is what needs to be done. They are your intermediary with the IRS.