Central District Consumer Bankruptcy Attorney's Association

Disagree.
Interest on all unsecured claims in bankruptcy stops running upon the
filing of the case. Unsecured priority taxes are paid, then, without
interest accruing after the filing of the bankruptcy.
Jay S. Fleischman, Esq.
Shaev & Fleischman, LLP
I help people get smart solutions to their bill problems.
http://www.ConsumerHelpCentral.com
556 S Fair Oaks Ave Ste 101-152
Pasadena CA 91105-2656
T: 626-808-4343 x704
E: jay@sflawca.com
Email isn't secure, so it's not confidential. By communicating with me by
email, you understand that it's not confidential.
On Fri, Aug 1, 2014 at 3:55 PM, Michael Avanesian michael@avanesianlaw.com
[cdcbaa] wrote:
>
>
> Just in case you need insight today, I am responding. I am sure the
> experts will do a better job.
>
> The way the IRS described to you is how it works in Chapter 11. While the
> interest potion of a tax claim is not allowed per 502(b)(2), nothing keeps
> it from accumulating. The nondischargeable nature of the interest though,
> means it's still around.
>
> I believe (my Chapter 13 confidence is very low) that student loans work
> this way in a Chapter 13. The interest portion is "deferred" to until after
> the case is over and then the Debtor has to pay it. Unless there is a
> specific Chapter 13 code section which makes taxes special, it should work
> similarly to student loans and how taxes are treated in an 11.
>
> Sincerely,
> Michael Avanesian
>
> On Fri, Aug 1, 2014 at 12:18 PM, Jim Selth jim@wsrlaw.net [cdcbaa] cdcbaa@yahoogroups.com> wrote:
>
>>
>>
>> Colleagues:
>>
>>
>>
>> I have a client who completed his Chapter 13 Plan last year and received
>> his discharge in February. The IRS priority claim for 2005, 2006 and 2007
>> was paid in full by the Trustee. Five months later, the client received
>> collection notices from the IRS showing a balance of interest and penalties
>> for these three years. I called the IRS insolvency specialist assigned to
>> the case in Los Angeles who said that interest and penalties continue to
>> accrue on the nondischargeable taxes during the Chapter 13 case even though
>> the Proof of Claim was paid through the Plan. I sent her the following
>> link to an IRS website:
>>
>>
>>
>> http://www.irs.gov/pub/irs-utl/2013_NTF ... Relief.pdf
>>
>>
>>
>> This publication states on Page 14 that Successful Chapter 13 plan
>> discharges all penalties and post petition interest on priority income
>> taxes paid in plan; otherwise, discharge is similar to Chapter 7 discharge.
>>
>>
>>
>> However, there is another IRS website which has contrary language:
>>
>>
>>
>> http://www.irs.gov/pub/irs-wd/1005029.pdf
>>
>>
>>
>> If the tax debt is dischargeable in Chapter 13, then the associated
>> prepetition and postpetition interest is dischargeable. If the underlying
>> tax liability is not dischargeable, then the associated prepetition and
>> postpetition interest liability is also not dischargeable.
>>
>>
>>
>> The insolvency specialist said she would talk to a supervisor. She called
>> me back yesterday and said that the penalties were discharged but that the
>> post-petition interest continued to accrue and still continues to accrue,
>> notwithstanding the first publication I referenced. Is this correct?
>>
>>
>>
>> Jim
>>
>>
>>
>> James R. Selth
>> Certified Bankruptcy Specialist*
>> Weintraub & Selth, APC
>> 11766 Wilshire Boulevard, Suite 1170
>> Los Angeles, California 90025
>> Telephone: (310) 207-1494
>> Facsimile: (310) 442-0660
>> E-Mail: jim@wsrlaw.net
>>
>> *Certified by State Bar of California as Certified Legal Specialist in
>> Bankruptcy Law
>>
>>
>>
>
>
Disagree.Interest on all unsecured claims in bankruptcy stops running upon the filing of the case. Unsecured priority taxes are paid, then, without interest accruing after the filing of the bankruptcy.
-------------Jay S. Fleischman, Esq.Shaev & Fleischman, LLPI help people get smart solutions to their bill problems.
The post was migrated from Yahoo.

Just in case you need insight today, I am responding. I am sure the experts
will do a better job.
The way the IRS described to you is how it works in Chapter 11. While the
interest potion of a tax claim is not allowed per 502(b)(2), nothing keeps
it from accumulating. The nondischargeable nature of the interest though,
means it's still around.
I believe (my Chapter 13 confidence is very low) that student loans work
this way in a Chapter 13. The interest portion is "deferred" to until after
the case is over and then the Debtor has to pay it. Unless there is a
specific Chapter 13 code section which makes taxes special, it should work
similarly to student loans and how taxes are treated in an 11.
Sincerely,
Michael Avanesian
On Fri, Aug 1, 2014 at 12:18 PM, Jim Selth jim@wsrlaw.net [cdcbaa] wrote:
>
>
> Colleagues:
>
>
>
> I have a client who completed his Chapter 13 Plan last year and received
> his discharge in February. The IRS priority claim for 2005, 2006 and 2007
> was paid in full by the Trustee. Five months later, the client received
> collection notices from the IRS showing a balance of interest and penalties
> for these three years. I called the IRS insolvency specialist assigned to
> the case in Los Angeles who said that interest and penalties continue to
> accrue on the nondischargeable taxes during the Chapter 13 case even though
> the Proof of Claim was paid through the Plan. I sent her the following
> link to an IRS website:
>
>
>
> http://www.irs.gov/pub/irs-utl/2013_NTF ... Relief.pdf
>
>
>
> This publication states on Page 14 that Successful Chapter 13 plan
> discharges all penalties and post petition interest on priority income
> taxes paid in plan; otherwise, discharge is similar to Chapter 7 discharge.
>
>
>
> However, there is another IRS website which has contrary language:
>
>
>
> http://www.irs.gov/pub/irs-wd/1005029.pdf
>
>
>
> If the tax debt is dischargeable in Chapter 13, then the associated
> prepetition and postpetition interest is dischargeable. If the underlying
> tax liability is not dischargeable, then the associated prepetition and
> postpetition interest liability is also not dischargeable.
>
>
>
> The insolvency specialist said she would talk to a supervisor. She called
> me back yesterday and said that the penalties were discharged but that the
> post-petition interest continued to accrue and still continues to accrue,
> notwithstanding the first publication I referenced. Is this correct?
>
>
>
> Jim
>
>
>
> James R. Selth
> Certified Bankruptcy Specialist*
> Weintraub & Selth, APC
> 11766 Wilshire Boulevard, Suite 1170
> Los Angeles, California 90025
> Telephone: (310) 207-1494
> Facsimile: (310) 442-0660
> E-Mail: jim@wsrlaw.net
>
> *Certified by State Bar of California as Certified Legal Specialist in
> Bankruptcy Law
>
>
>
>
Just in case you need insight today, I am responding. I am sure the experts will do a better job.The way the IRS described to you is how it works in Chapter 11. While the interest potion of a tax claim is not allowed per 502(b)(2), nothing keeps it from accumulating. Thenondischargeablenature of the interest though, means it's still around.
I believe (my Chapter 13 confidence is very low) that student loans work this way in a Chapter 13. The interest portion is "deferred" to until after the case is over and then the Debtor has to pay it. Unless there is a specific Chapter 13 code section which makes taxes special, it should work similarly to student loans and how taxes are treated in an 11.
Sincerely, Michael AvanesianOn Fri, Aug 1, 2014 at 12:18 PM, Jim Selth jim@wsrlaw.net [cdcbaa] <cdcbaa@yahoogroups.com> wrote:
Colleagues:
I have a client who completed his Chapter 13 Plan last year and received his discharge in February.Trustee. Five months later, the client received collection notices from the IRS showing a balance of interest and penalties for these three years. I called the IRS insolvency specialist assigned to the case in Los Angeles who said that interest and penalties continue to accrue on the nondischargeable taxes during the Chapter 13 case even though the Proof of Claim was paid through the Plan. I sent her the following link to an IRS website:
http://www.irs.gov/pub/irs-utl/2013_NTF ... Relief.pdf
This publication states on Page 14 that ion interest on priority income taxes paid in plan; otherwise, discharge is similar to Chapter 7 discharge.
However, there is another IRS website which has contrary language:

The post was migrated from Yahoo.