Chapter 7 and 13 income tax questions

[hsimpson]

I reside in Texas.

I currently owe the IRS close to 40K with actual taxes and fees combined. I had some enrolled agents handling the issue, but I have decided to file bankruptcy. There is a lot of conflicting information here and on other websites. Hopefully someone can clear some of this up.

1. Over half of the Income taxes qualify for the 3 year rule (been filed and taxes assessed over three years ago).
2. I was told these can only be handled using Chapter 13 on some sites, but on this site I see many posts where it states these can be discharged using Chapter 7, which is obviously preferrable. Is anyone for sure it could be cleared in Chapter 7 if it meets the criteria necessary?
3. After I clear Chapter 7 can I file Chapter 13 on the remaining taxes? I can't hold the IRS off any longer, so I must file soon. Must I wait until the Chapter 7 is gone (10 years) before I can file Chapter 13?



Thanks so much for any help anyone can give.

[AttorneyOney]

Originally Posted by hsimpson

2. I was told these can only be handled using Chapter 13 on some sites, but on this site I see many posts where it states these can be discharged using Chapter 7, which is obviously preferrable. Is anyone for sure it could be cleared in Chapter 7 if it meets the criteria necessary?

Section 523(a)(1) is a bit dense, and it's very easy to misunderstand it (or a web site that tries to explain it). It basically says that priority taxes won't be discharged, and neither will taxes for which no return was ever filed, for which a return was filed late and within the last 2 years, or which the debtor tried to evade.

Originally Posted by hsimpson

3. After I clear Chapter 7 can I file Chapter 13 on the remaining taxes? I can't hold the IRS off any longer, so I must file soon. Must I wait until the Chapter 7 is gone (10 years) before I can file Chapter 13?

A chapter 13 plan has to pay all priority debts in full, which means that priority taxes that couldn't be discharged in a 7 have to be paid in a 13. The chapter 13 superdischarge would, however, cover taxes that aren't dischargeable under the OTHER prong of 523(a)(1).

[hsimpson]

A chapter 13 plan has to pay all priority debts in full, which means that priority taxes that couldn't be discharged in a 7 have to be paid in a 13. The chapter 13 superdischarge would, however, cover taxes that aren't dischargeable under the OTHER prong of 523(a)(1).

Thank you for your response. I am unfamiliar with the term "superdischarge". If you have time could you give me a brief explanation?

Also, could I file 13 after filing 7? I guess my question is, are they considered totally separate proceedings in regards to the time limit before you can file again?

[Ladynred]

Its called a 'Chapter 20' and you may be able to do it. If your Ch 7 is discharged w/o any problems, then there shouldn't be any problem filing for a Ch 13.