You pick up the phone and someone on the other end says they are with the IRS. Don't panic. Hang up the phone immediately! Over the past several years, thousands of victims have lost millions of dollars to scammers purporting to be the IRS. If you receive an unexpected phone call from the IRS, it is probably not actually a representative of the IRS calling. Thieves who claim to be calling from the IRS continue to try to get people to provide personal information over the telephone. The scammers then use personal information to gain access to the victim’s bank or other account.
Taxpayers should be careful to not fall for a scammer’s tricks. The scammers make urgent unsolicited calls, use scare tactics and threats, utilize caller ID spoofing, and offer other false information in attempts to trick victims.
There are several tips from the IRS to help taxpayers avoid becoming a scam victim.
The IRS will not:
Taxpayers who think they might actually owe taxes should follow these steps:
Taxpayers who have received a fraudulent call should follow these steps:
Scammers are not only using the telephone, but are also utilizing email and other methods trying to impersonate the IRS and taxpayers should be careful of other communications as well. Taxpayers can visit IRS.gov to explore their rights and the agency’s obligations to protect them.
When someone owes multiple mortgages on a property, even where the property is residential property, it is worth considering whether a Chapter 13 bankruptcy might provide that person the ability to strip off a junior mortgage lien. This requires evaluating whether the property value is insufficient to secure the junior mortgage(s). A debtor in a Chapter 13 proceeding may strip off a junior mortgage lien when the debt owed on a senior mortgage lien exceeds the value of the collateral. The gross value of the property without deduction for hypothetical costs of sale or other deductions must exceed the amount owed to the senior position lien holder. For lien stripping of a residential mortgage relief to be available, there cannot be a dollar in equity for the junior mortgage to attach to so that the junior position mortgage is wholly unsecured.
When a Chapter 13 debtor has stripped a junior mortgage lien, a claim for a stripped off mortgage is treated as an unsecured obligation to be repaid per the terms of a Chapter 13 plan along with similar unsecured claims such as medical debt or credit card claims (sometimes repaid at 0% if that is what the Chapter 13 plan provides to unsecured creditors). The Courts have ruled that even a Chapter 13 debtor who may not be eligible for a Chapter 13 discharge due to a prior filed discharged bankruptcy within relevant time periods may utilize Chapter 13 for lien stripping of a wholly unsecured mortgage if other eligibility and requirements of plan confirmation are met.
However, no such junior mortgage relief is available to a debtor in a Chapter 7 case because the Supreme Court in Caulkett has confirmed that Dewsnup v. Timm does not permit lien stripping in a Chapter 7 bankruptcy. But, Dewsnup is inapplicable to Chapter 13, according to In re Enewally, 368.F.3d 1165, 1170 (9th Cir. 2004). Lien stripping is permitted in Chapter 13 and the operative authority includes 11 USC §1322(b)(2), Nobelman v. American Savings Bank, 508 U.S. 324 (1993), In re Zimmer, 313 F.3d 1220 (9th Cir., 2002), and In re Lam 211 B.R. 36 (9th Cir BAP, 1997). Therefore, Chapter 13 bankruptcies can provide a valuable tool to some individuals which will allow them the ability to retain their property without being saddled long-term with a junior mortgage on a property that lacks value to secure that junior mortgage.
Criminal fines or restitution debts are not dischargeable in either Chapter 7 or Chapter 13, but Chapter 13 can provide a way to propose a plan to repay all or a portion of criminal fines over three to five years and it may be possible to specially classify such debts to repay criminal fines ahead of other unsecured claims under certain circumstances.
If a driver’s license has been suspended or revoked because of the failure to repay fines, the filing of a Chapter 13 bankruptcy will allow a driver’s license to be reinstated. If a license has been suspended or revoked as a result of DUI, Habitual Traffic Offender, or for some criminal sentence, although the filing of a Chapter 13 may not be effective to reinstate a license there still may be benefits to filing as to other debts.
If Court or traffic fines have resulted in a driver’s license suspension or revocation, it will be important to obtain a copy of a complete driving transcript report from the DMV so that all fines or obligations that are causing a problem with a driver’s license can be included and listed on the Bankruptcy schedules.
A successful Chapter 13 plan allows a Debtor to reinstate a delinquent mortgage as if no default had occurred. The Chapter 13 Trustee will verify the status of a mortgage as reinstated before the completion of a plan. When a Chapter 13 debtor receives a discharge, a permanent injunction against collection on amounts addressed through the Chapter 13 plan goes into place. The willful failure of a creditor to have properly credited payments received under a confirmed Chapter 13 plan where there has been no default by a Debtor constitutes a violation of the discharge injunction if such action causes material injury to a Debtor. A party who knowingly violates a discharge order can be held in contempt and sanctions awarded. The Ninth Circuit has applied a two-part test for a Debtor to prove in determining whether sanctions are justified: (1) the creditor knew the discharge injunction was applicable and (2) the creditor intended the actions which violated the injunction.
As to the first prong, the Court must find actual knowledge in the context of contempt before a finding of willfulness can be made. Meaning, the Court must find evidence that the creditor was aware of the discharge injunction and that it applied to its claim. As to the second prong concerning a party’s intent, the focus is not on a party’s belief or intent, but on determination of whether a party’s conduct complied with the order at issue. If the Court finds a party has willfully violated the discharge injunction to a Debtor’s detriment, the Court may award compensatory damages, punitive damages, and attorney’s fees to the Debtor. Therefore, a Chapter 13 Debtor has protection to know once a delinquent mortgage has been cured through a confirmed Chapter 13 plan, that a Debtor is absolutely entitled to a fresh start going forward.
For tax liability to be dischargeable in bankruptcy, i.e. no longer considered a personal liability, at least the following three rules must be met:
Please note that if taxes are not dischargeable in a Chapter 7 bankruptcy, a Chapter 13 bankruptcy may provide meaningful protection to a person owing tax debt. There has been much litigation across the country in the past several years concerning discharge of tax liability in Chapter 13 cases and recent court decisions have changed the interpretation of tax claim treatment in Chapter 13 cases. The US Supreme Court was asked to hear such a case but recently declined to do so.
A successful Chapter 13 Plan can provide for repayment of secured and unsecured priority tax liability to the IRS and allow for discharge of penalties, interest on penalties, and other eligible general unsecured tax debt. In addition, priority taxes paid through a Chapter 13 Plan will not accrue additional penalties.
Liability on late-filed tax returns are very likely never dischargeable without a very good reason. However, the debt can still be managed through a Chapter 13. Where there is non-dischargeable tax liability, the accruing interest is also non-dischargeable but a Chapter 13 plan may be able to provide to pay that interest to the IRS in some circumstances.