I owe $5500 to the IRS from a 2005 return. I did an Offer in Compromise for this debt to find out that they will take my tax return for the next 5 years until it is paid in full. What is the point in settling a debt if they are going to take the money anyway? I need my return to keep afloat. So if I file Chapter 7 now and include this debt which many lawyers told me that I can - then after the Chapter 7 is discharged I can file my return and get my refund right? If I am going to file might as well do it now and and get an extension to the April 15th deadline. Let me know.
Smart A$$ above doesn’t know what he is talking about and you have it wrong too. If IRS accepts an offer in compromise from you, it will include keeping your refunds for all year through the year of acceptance. You are then on probation for five years and must file your returns on time and pay anything due or the old tax liability will be resurrected.
What do you mean "I need my return to keep afloat." Your return is the document you mail to IRS. If you were concerned about refunds, you can control how much is withheld and keep refunds to a minimum.
You don’t make it clear if you have filed an offer in compromise or not. If you have not, your 2005 tax can not be discharged in bankruptcy until after April 15. If you have filed one and it is in process or has been rejected, you will have to wait until April 15 PLUS the amount of time the offer is under consideration PLUS 30 days. Count the days carefully before making a move.
on Jul 23rd, 2009 at 10:20 am
IRS debt is valid until paid. No bankruptcy or statute of limitations will help you. Sorry, but you can’t just skip paying taxes because you don’t have the money.
Yes, the IRS will keep your refund until your debt is settled. If you pay off the debt they will stop taking your refund. The 5 years is their estimate of how long it will take for your refunds to settle your debt. If you pay it off, you’ll start getting tax refunds again.
By the way, the IRS isn’t keeping YOUR refund, they are keeping THEIR money because you aren’t due a refund. Think about it this way. If I owed you $5,000 and you owed me $1,000, would you pay me what you owe me or would you just reduce the amount that I owe you? You may have overpaid for 2008, but you are still in the red overall with the IRS.
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on Jul 23rd, 2009 at 10:40 am
Smart A$$ above doesn’t know what he is talking about and you have it wrong too. If IRS accepts an offer in compromise from you, it will include keeping your refunds for all year through the year of acceptance. You are then on probation for five years and must file your returns on time and pay anything due or the old tax liability will be resurrected.
What do you mean "I need my return to keep afloat." Your return is the document you mail to IRS. If you were concerned about refunds, you can control how much is withheld and keep refunds to a minimum.
You don’t make it clear if you have filed an offer in compromise or not. If you have not, your 2005 tax can not be discharged in bankruptcy until after April 15. If you have filed one and it is in process or has been rejected, you will have to wait until April 15 PLUS the amount of time the offer is under consideration PLUS 30 days. Count the days carefully before making a move.
References :
I am an enrolled agent who specializes in representing taxpayers who owe a lot of back tax or unfiled returns. Your big mess is my ordinary day at the office. If you want additional help you can email through my profile.
on Jul 23rd, 2009 at 10:48 am
No. Chapter 7 only removes some penalties, not the money owed..
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on Sep 1st, 2009 at 10:40 pm
I wrote the above situation about my case months ago. I filed chapter 7 because legal advice told me I could get it discharged. By Publication 908 -revised in March 2009 the IRS was to put a lien on me before I filed bankruptcy or went to fight for what I owed to the Trustee during the bankruptcy- The law states that a Federal Bankruptcy Judge has the authority to discharge any IRS debt under $10,000. The IRS code - excluded every situation but my own in its own publication. During my bankruptcy-the IRS had a hold on my account - they told me that after the discharge my debt would be release and it would be over with. Great- but after it was discharged they came after me with like a whirlwind- coming to dock my accounts and paycheck. They totally disregarded the law and the courts. Then when I tried to fight it they kept changing the paperwork and the dates. I filed my 2005 taxes in January of 2006. They missed up my return from 2005 - sent me more earned income tax credits for my kids. Now that I have lost my job and house - they want it back. I could have made up documentation to save myself when I was audited in April of 2008 but I did not want to lie. I was honest- big mistake. They said that the rules do not apply to me because even with the print out of my tax dates stating that they knew that I owed the debt back in 2006 - they did not formally put it on my account until this year making my discharge in court invalid. They have kept changing the dates with me- still being dishonest with me- Now they want to do the Offer in Compromise for $10 but they will take my return this year and next. I used to get about $10,000 a year in a return because I was an outside sales person- being taxes at 43% outright when my tax rate with was about 28% They kept my money not theirs all year then now they want my money when I do not owe it. I had the deductions to cover it in the audit but the examiner would not take it because my wife and I had expense from a start up business. They are crooked and I hope any one that works for the IRS burns in Hell! They are unconsitutional and destructive. I know many working class and small business people that they are going after. I have no home, one car and four people in my family. I have lost every bit of money in the bank, 401k, everything- these Nazis want a hard working man’s money- while the rich can hire a lawyer to fight for them- I hope the American people wise up and rebel against this tyranny.