Bankruptcy Client Disputes IRS’s Proof of Claim

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    Raymond Garnsey

    Client believes the IRS’s proof claim is wrong.. He filed Chapter 7 July 1, 2019 and received a discharge on March 4, 2020 with a partial release of lien for 2013 ($23,957.22) as well as 2014 ($68,759.56)

    Wife filed Chapter 13 on February 11, 2020. Total IRS debt is $249,617.72 including interest and penalties. Joint return was filed for their 2019 return on July 15, 2020. IRS did a SFR when she filed for bankruptcy.

    I filed my 2848 on October 26th but as of yesterday it has not been processed by CAF so I cannot pull transcripts to compare to the Proof of Claim. Has anyone experienced long processing times of their 2848’s?

    Husband called me over the weekend to say they were thinking of selling the house because of the boom in the Fairfield county market (house is in Fairfield CT on the Long Island Sound) and would that be possible. Told him with the lien in place any buyer’s attorney seeing the lien in place might advise his/her client not to consider the purchase.If they were serious about putting the house on the market they should run it by their bankruptcy attorney. If he agrees and they get a listing agreement with a realtor we could request they withdrawal. If they go that route would the request for withdrawal be made to the Lien Unit or through the Bankruptcy Court?

    I have not mentioned that if they pursue the bankruptcy and their taxes get discharged the lien will survive. Should I tell them now? My engagement letter is only for the transcript analysis.

    James Wade


    Someone mentioned contacting the person on the IRS’ proof of claim. I’ve been told these personnel are very responsive and try to work with debtors. I’d ask the bankruptcy attorney to contact that person and have them provide you with the information you need.

    As for the other stuff, this is a bit complicated with a separate filing by each spouse and what appears to be a pending Chapter 13, with its attendant co-debtor stay. I’d have them speak with the bankruptcy attorney regarding the ability to sell the home. They may need court approval. This also applies equally to the lien issue. The bankruptcy attorney should address that issue.

    Finally, you asked about the lien withdrawal. I believe that this is handled strictly through centralized lien unit.

    Good luck!

    Jim Wade

    Marvin Mann

    1. I would try dealing with IRS Insolvency Unit per proof of claim, as said, they seemed to want to help

    2. I think they are going to have to file a motion with bankruptcy court to sell the house, indicating how the funds will be disbursed. The bankruptcy attorney will have to co ordinate with the Chapter 13 trustee to get court approval, and then because IRS has a lien, they will be among the first to be paid back

    Good luck

    Marvin Mann

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