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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2506
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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Hi, I filed for the $7500 interest free loan with my 2008 Federal

Resolved Question:

Hi, I filed for the $7500 interest free loan with my 2008 Federal Income Taxes. I bought a new home in Oct 08 which basacially qualified me. I was told by several suppose to be experts that I qualified for the $7500 interest free IRS loan form the 2008 Tax year.
II received a letter from IRS asking for supportive documents on i ad I sent them my new home that I boguht clsoing statement, utility bills and whatever they asked for.I wasa due to receied like $490 back in 2008 taxes but did not get any $ and the IRS said I owed like $10.12 plus the $490 because the 1st installment payment would come out of the 2010 Tax year. Based upon this I thought they acccepted my 2008 IRS filing and everythign was good. Well in Jul22, 2011 I got a letter saying I did nor qualify due to the fact I had lived in the prior home within 3 years of buying my new home and I had to pay back the IRS the $7500 plus interest plus a $1500 penality.l called the IRS 3 times on it,each time the agent told me a different story. The 1st female agent said he waiver the $1500 penality because she did not feel I had committed any purpose fraud against the IRS but it was more of a mistake or and error on the 2008 H&R Black Tax Cut Edition for the 2008 Tax year that allowed the $7500 interest free loan for buying a new home I used the H&R Black Tax Refund CD and have so since they came out. I am 60 and have filed my taxes sincee age 17 or 43 years iin a row without missing any single year since 1968.

I am 80% paper diabled bythe VA and 60% body disabled Veteran Vietnam era type. presently and all my income is disability or my Army E7 Retirement. NO EARNED INCOME.I am now forced to file CHAPTER 7 BANKRUPCY DUE TO INVESTIMENT IN 4 HOMES IN 2006 BETWERE BUSINESS RENTALS SINGLE FAMILY HOMES. I HAVE ACQUIRED A BANKRUPCY ATTORNEY ALREADY AND PAID THE RETAINER FEE TO HER. I AM WOKING ON THE PAPPERWORK SHE GAVE ME AS OF NOW. I GOT TO COMPELTE 2 CLASSES ON BANKRUPCY ON THE INTERNET OR MAIL BEFORE I TURN IN MY CHAPTER 7 PAPERWORK TO HER.

QUESTIONS: I LISTED THE $9350 ON MY CHAPTER 7 APPLICATION (INCLUDING THE $1500 PENALITY, WHICH WAS SUPPPOSE TO BE TAKEN WAY BY IRS ACCORDING TO THE IRS AGENT) I FOUND OUT LATER SHE DID NOT HAVE THE AUTHORITY TO DO IT ON THE PHONE AND A SPEICAL FORM IS REQUIRED BY IRS TO DO JUST THAT.

i GOT TO 21 AUG TO REPOND TO THE LETTER DTD 22JUL ON THE MONEY OWNED THE IRS $9863.00.

DO YOU KNow OF ANY IRS US CODE OR IRS POLICY THAT WOULD ALLOW THE IRS TO SUPPEND THE DEBT/MY CASE(FOR 90 DAYS OR SO) UNTIL THE CHAPTER 7 BANKRUPCY JUDGE DECIDES MY CASE (I AM 100% SURE OF BEING AWARDED THE CHAPTER 7) I AM ABOUT $80000 NEGATIVE UNDER WATER ON THE 4 HOMES AND THE 4 HOME MORTGAGES PAYMENTS AVERAGE $250 MORE THAN THE RENT ON EACH OF THEM. I WAS ON A 5 YEAR ARM AND THE 5 YEARS ENDED 1AUG 2010. THE PAYEMNT SENT SKY HIGH AND THE RENT HAS DECREASED 25% DUE TO THE RECESSION. MY IMCOME WILL NOT ALLOW ME TO MAKE UP THE DIFFERENCE. I CAN JUSTIFY A SURVIVAL AMOUNT NEED AT $3947 AND A INCOME OF $4047 WITOUT CONSIDERATION OF THE 4 HOMES I AM
LETTING GO BACK TO THE MORTGAGE COMPANY. I PAID 10% DOWN INITITALLY AND I WILL LOOSE MONEY EITHER WAY I GO. I AM ALSO LETTING SEVERAL SMALLER BILLS GO BACK UNSECURED AND TWO SECURED CARS.

AS A GENERAL RULE OF THUMB I WAS THINKING OF ASKING THE IRS FOR A 90 DAY SUSPENSION OF MY CASE DUE TO MY CHAPTER 7 THAT INCLUDES THEM. TWO IRS AGENTS SAYS IC AN LIST THEM DOWN SO IT SEEMS LIEK IT IS A JUDGEMENT CALL MY THE ASSINGED BANKRUPCY JUDGE TO ALLOW IT OR NOT AND NOT ANY US CODE BY THE IRS BUT NOT SURE.

WHAT WOULD BE YORU RECOMMNEDATION FOR THE CONTENTS IN MY LETTER TO THE IRS ONTHE 90 DAY SUSPENSION PENDING MY CHAPTER 7 THAT INCLUDES THEM AND HWO MUCH DETAIL SHOULD I GO INTO, OTHER THAN STATING I PAID MY TAXES FOR 43 YEARS IN A ROW AND NEVER MISSED A YEAR SINCE 1968???????????? AND HAEV ACQUIARED A CHAPTER 7 BANKRUPCY ATTORNEY ALREADY???????????????????????????
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 2 years ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

I understand the dilemma you have,and I understand the frustration you are having with the IRS.

Terry L. :

Here's the situation.

Terry L. :

First, once filed, the bankruptcy prohibits all collection action against you from all creditors, including the IRS (with the exception of tax refunds received while the case is pending).

Terry L. :

Second, and the bigger issue here is whether the taxes will be dischargeable. My hunch is no, unfortunately.

Terry L. :

To be dischargeable, tax debt must meet the following requirements:

Terry L. :

1. must be income tax

Terry L. :

2. must be for a tax year 3 years before the bankruptcy case.

Terry L. :

3. taxes must have been timely and accurately filed, but if late or inaccurate, have been filed/corrected more than two years before the bankruptcy case is filed.

Terry L. :

4. Must not have been assessed by the IRS in the last 240 days.

Terry L. :

Depending on when these events occurred will determine dischargeability of the debt. Seeing that they disqualified you in July 2011, I think you might fail items 3 and/or 4 above.

Terry L. :

Talk to your attorney, they can request a determination from the IRS to see if the debt would qualify for discharge. Otherwise, you would need to work something out with the IRS. Interest can still run on the unpaid portion while the bankruptcy case is pending, the IRS just cannot collect from you during the case.

Terry L. :

The Automatic stay provisions of the bankruptcy code give you that protection, automatically.

Terry L. :

Thanks for your question, let me know if you have any further questions. Good luck.

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2506
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and other Bankruptcy Law Specialists are ready to help you

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