Tough question about the iRS

[terryeaton]

What is the name of your state (only U.S. law)? Texas

Hi, I have a tough legal question my attorney can't seem to find the answer to.

I filed bankruptcy (chapter 13) in 2009. In 2010, the IRS came up with this nifty little change:

http://www.irs.gov/irm/part5/irm_05-017-011.html

"5.17.11.18 (10-01-2010)
Discharge

Under 11 USC § 1328(a)(2), as amended by BAPCPA, the debtor is discharged of all debts provided for by the plan or disallowed under 11 USC § 502 (e.g., late claims filed after the bar date) except:

trust fund taxes; and

taxes for which returns were not filed, or were filed late and within two years of the petition date, or for which the debtor made a fraudulent return or made a willful attempt to evade or defeat the tax."

While it is true that I did file my taxes within 2 years of when I petitioned for bankruptcy, the change they made was in 2010, which was several months after my chapter 13 was already "in play." I don't see how they can make something like that "retroactive" to people already in a confirmed plan. My case was successful and ended several months ago, then I get a letter from them saying i STILL own about $4,000 in taxes from like 2008.

I've called them, and they say I owe the taxes. My attorney says he doesn't think I do, since I was already in my plan.

Has anyone ever heard of this 2 year thing before?

Thanks

-Terry

 

[davew128]

The IRS didn't change the law (nor CAN they). Your cite is to their internal policy NOT the law. The law itself (which is bankruptcy law not tax law) didn't change either. If your attorney doesn't understand this, he should go back to the cereal box he got his law degree from and demand a refund.

 

[terryeaton]

Do you know where they are coming from saying I still owe almost $4k after having a successful chatper 13 completion? They are saying it's because of this 2 year thing. It appears to have been added in 2010, after I was confirmed and in my 13 for several months.

 

[tranquility]

It used to be three years. Be grateful for the change in policy.

(8) Eighth, allowed unsecured claims of governmental units, only to the extent that such claims are for—
(A) a tax on or measured by income or gross receipts for a taxable year ending on or before the date of the filing of the petition—
(i) for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition;
(ii) assessed within 240 days before the date of the filing of the petition, exclusive of—
(I) any time during which an offer in compromise with respect to that tax was pending or in effect during that 240-day period, plus 30 days; and
(II) any time during which a stay of proceedings against collections was in effect in a prior case under this title during that 240-day period, plus 90 days; or

 

[terryeaton]

It used to be three years. Be grateful for the change in policy.

Why would I be grateful for a change that doens't even pertain to me?

So far, the only response I've gotten has been unhelpful and incredibly rude.

Anyone else?

When you do a chapter 13, you're supposed to come out not oweing the debtor anymore that is INCLUDED in the chapter 13. Yet, the IRS still says I owe them money even though mine was considered a "100% plan".

Very disappointing...

 

[davew128]

Kind of missing the point here. Regardless of what the law said then or now, your tax return was filed within that exclusion period. Either way the tax liability couldn't be discharged. Again, if your bankruptcy attorney doesn't understand this section of bankruptcy law (which is where it is, not in the tax code) then you need a new bankruptcy attorney.

 

[tranquility]

Why would I be grateful for a change that doens't even pertain to me?

So far, the only response I've gotten has been unhelpful and incredibly rude.

Anyone else?

When you do a chapter 13, you're supposed to come out not oweing the debtor anymore that is INCLUDED in the chapter 13. Yet, the IRS still says I owe them money even though mine was considered a "100% plan".

Very disappointing...

It specifically pertains to you. It is not discharged.

For an explanation of the law,

http://www.irs.gov/pub/irs-wd/0603001.pdf

 

[terryeaton]

Kind of missing the point here. Regardless of what the law said then or now, your tax return was filed within that exclusion period. Either way the tax liability couldn't be discharged. Again, if your bankruptcy attorney doesn't understand this section of bankruptcy law (which is where it is, not in the tax code) then you need a new bankruptcy attorney.

No, the point is, and what my original question asked is, if they enact something in 2010 like this, how can it apply to my chapter 13 that has already been confirmed and in motion for several months?

 

[tranquility]

No, the point is, and what my original question asked is, if they enact something in 2010 like this, how can it apply to my chapter 13 that has already been confirmed and in motion for several months?

They did not "enact" this in 2010. The law is still the same, three years. The policy has apparently been reduced to two years by IRS rules if what you say is correct. It applies to your chapter 13 as taxes within the last three years of filing are not discharged.

 

[davew128]

No, the point is, and what my original question asked is, if they enact something in 2010 like this, how can it apply to my chapter 13 that has already been confirmed and in motion for several months?

No, you missed the point. Completely. So did your less than stellar bankruptcy attorney.

What part of your tax wouldn't be discharged either way are you not comprehending? Your taxes were NEVER in the discharge plan nor could they be.