Chapter 13 IRS secured tax lien
Posted: Tue Sep 25, 2012 2:02 pm
I generally agree with Steve. Report the plan on your petition
schedules, including a notation that it's not a part of the estate under
Patterson. Don't pay the value of the ERISA plan through your chapter
13 plan. IRS should be fine with that, but as Steve points out, the IRS
lien still attaches after the bankruptcy is over, and it will have
appreciated in value. The lien does not attach to postpetition
contributions and appreciation attributable to those contributions, so
you'll have some nasty computations to make.
I don't think it's possible to pay this lien off in the plan, because
the underlying asset is not an asset of the estate, and the IRS will
almost certainly object on that basis.
- John D. Faucher
818/889-8080
On 9/25/12 8:52 AM, Steven B. Lever wrote:
>
> I guess you can make that argument in the Chapter 13, and not pay the
> value of the ERISA qualified plan, but after the case the IRS can take
> their pension. It may be better to pay their secured interest
> (whether in or out of the estate) now so they don’t start messing with
> postpetition appreciation and contributions. Put in the plan that it
> satisfies their secured interest in the plan.
>
> Steven B. Lever
>
> *From:*cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] *On
> Behalf Of *Sina Maghsoudi
> *Sent:* Monday, September 24, 2012 6:41 PM
> *To:* cdcbaa@yahoogroups.com
> *Subject:* Re: [cdcbaa] Chapter 13 IRS secured tax lien
>
> Hi,
>
> I appreciate the advice. My question is a little more specific. There
> is case law that states that ERISA qualified plans are not part of the
> bankruptcy estate and not secured. The IRS filed manual says the same
> thing.
>
> In /Patterson vs. Shumate, /the Supreme court held that ERISA, a
> federal statute, qaulifies under the definition of applicable
> non-bankruptcy law. The Court held that ERISA mandated restrictions on
> the transfer of pensions and 401(k) accounts were the type of
> non-bankruptcy law to which section 541(c)(2) refers: “a debtor’s
> interest in an ERISA qualified pension plan may be excluded from the
> property of the bankruptcy
> estate
> pursuant to 541(c)(2).” The important lesson for consumers is that
> your 401(k), if ERISA qualified, does not become part of the
> bankruptcy estate.
>
> The general rule is that if a property is not part of the bankruptcy
> estate then the debtor doesn't have to pay off the secured debt during
> the Chapter 13 plan. My understanding of the case law is that the IRS
> keeps its lien for statutory period but the lien operates outside of
> the Chapter 13 case. In other words, the nonpriority tax lien isn't
> discharged as unsecured debt. For my client that is great because the
> lien will expire in 2014. The client also doesn't care about the lien
> at this point in time. She is filing Chapter 13 for a different
> reason. The debtor just can't afford to pay the lien off during the
> Chapter 13. Can I make a deal with the IRS where the lien doesn't get
> discharged and the IRS won't object to the plan?
>
> Should I be able to exclude the property from the bankruptcy estate
> and claim the IRS can't claim it as security. If the IRS doesn't play
> ball, what type of motion should I bring to have the judge rule on the
> issue. The trustee's attorney informed me --off the record-- that my
> issue has generally not been a problem for debtor's, but I have no
> idea what to do because the IRS representative has the same opinion as
> the attorney's on this list serve. If the trustee doesn't object, does
> that mean the IRS has to file an objection to the plan or will the
> judge support the IRS even if the trustees doesn't objection.
>
> Thanks in advance.
>
> I know most people have better things to do at this time, but I don't.
>
> Sina
>
> ------------------------------------------------------------------------
>
> *From:*Dennis
> *To:* "cdcbaa@yahoogroups.com "
>
> *Sent:* Monday, September 24, 2012 5:52 PM
> *Subject:* Re: [cdcbaa] Chapter 13 IRS secured tax lien
>
> IRS can claim a lien on anything. Prior to 1996 tax act, there was
> nothing one could do, but now debtors can wait out the 10 year statute
> before
>
> Collecting from pension. Not a remedy for a 13 plan.
>
> D
>
> Sent from my iPhone
>
>
> On Sep 24, 2012, at 2:41 PM, Sina Maghsoudi > wrote:
>
> Hi,
>
> Thanks for the advice. I thought there was significant authority
> that the ERISA plan, UC retirement, can't be the basis for a tax
> lien. My client can pay 5K of the car equity, but won't be able to
> pay anywhere near the 15K for ERISA.
>
> On the Internet the IRS instructions for employees state that
> ERISA-qualified retirement or 11 USC 541 property isn't property
> of the estate. Will the IRS representative work with me on this.
> Initially, he seemed to fell that the entire 25k, including junk
> personal property and the ERISA retirement, justified secured tax
> status.
>
> If the IRS doesn't play ball, will the trustee still object and do
> I need to file a motion to modify or object to the secured tax
> status.
>
> Best,
>
> Sina
>
> ------------------------------------------------------------------------
>
> *From:*Catherine Christiansen >
> *To:* "cdcbaa@yahoogroups.com "
>
> *Sent:* Monday, September 24, 2012 3:20 PM
> *Subject:* Re: [cdcbaa] Chapter 13 IRS secured tax lien
>
> You should amend the petition to show the debt is secured. I
> don't know if your plan is confirmed yet and amending will incur
> the filing fee. The IRS is entitled to interest on the debt. The
> IRS will not want the worthless property. They are looking at the
> 401K and the vehicle. You should be able to strip the lien to the
> value of the 401K and the vehicle. Call the IRS Representative on
> the POC and speak with them. They are usually cooperative and
> will amend the claim as secured and unsecured according to the
> value of the property.
>
> Catherine Christiansen
>
> ------------------------------------------------------------------------
>
> *From:*Sina Maghsoudi
> *To:* "cdcbaa@yahoogroups.com "
>
> *Sent:* Monday, September 24, 2012 2:13 PM
> *Subject:* [cdcbaa] Chapter 13 IRS secured tax lien
>
> ------------------------------------------------------------------------
>
>
> Hi,
>
> Does anyone have a motion for objection or modification of a
> secured tax lien when there is limited property to secure the
> nonpriority tax debt. Also, can I just tell the IRS to pick up
> worthless property like used clothes and dishes instead of paying
> off the secured claim as part of the Chapter 13 plan. I originally
> filed the the tax debt as entirely nonpriority. Should I amend the
> petition or just object to the claim.
>
> Finally, has anyone had any luck getting the IRS to OK the plan if
> secured debt is paid in full during the 5 years. The secured debt
> is about 40K. The assets are 25k, but that includes a 15K ERISA
> account, 5K equity in a car, and the rest worthless personal property.
>
> Any other suggestions.
>
> Thanks in Advance.
>
> Sina
>
> >
> ------------------------------------------------------------------------
>
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