Check System
Send us your comment!

Your comment will be read by our web staff, but will not be published.

Please do not enter any personal information. Your comment is voluntary and will remain anonymous, therefore we do not collect any information which would enable us to respond to any inquiries.

However, provides a How to Contact the IRS page where you will find guidance on where to submit specific questions.

Share this presentation
Copy and paste the following URL to share this presentation
To email a link to this presentation, click the following:
This program writes a small 'cookie' locally on your computer when you set a bookmark.
If you want to utilize this feature, check the following checkbox. Otherwise, bookmarks will be disabled.
This is an IRS
audio presentation.

To view this page, ensure that Adobe Flash Player
version 10 or greater is installed.

Get Adobe Flash player

Slides PDF

Karen Russell: Okay, so I see it is the top of the hour. And for those of you just joining, welcome to today's webinar, Bankruptcy and the IRS. We want to, we're glad you're joining us today. My name is Karen Russell, and I'm the Senior Stakeholder of Liaison with the Internal Revenue Service and I am moderating today's webinar, which is slated for 100 minutes. Now, before we begin, if there is anyone in the audience that's with the media, if you would please send an email to the address on this slide. Be sure to include your contact information and the news publication you're with, our media relations and stakeholder liaison staff will assist you and answer any questions you may have. And as a reminder, this webinar will be recorded and posted to the IRS video portal in a few weeks. And the portal is located at And please be aware that continuing education credit or certificates of completion are not offered if you view any version of our webinars after our live broadcast. We hope you don't experience any technology issues. But if you do, this slide has helpful tips and reminders. We've also posted a technical help document that you can download from the material section on the left side of your screen. And that document provides the minimum system requirements for viewing the webinar, along with best practices and quick solutions. And because of compatibility issues, we encourage you to use a browser other than Internet Explorer, because you may experience frozen screens or other technology issues if you use IE. So if you're using a browser other than Internet Explorer, and you're still having problems, try one of the following. Close the screen where you're viewing the webinar and relaunch it or click on settings on your browser viewing screen and select HLS. You should have received today's PowerPoint and a reminder email but if not, you don't need to worry because you can download the PowerPoint by clicking on the materials drop down arrow on the left side of your screen as shown on this slide. We also have resource documents for Publication 908 Bankruptcy Tax Guide and Publication 5082, What you should know about Chapter 13 Bankruptcy and Taxes available for you to download as well. Closed captioning will be available throughout today's presentation. If you're having trouble hearing the audio through your computer speakers, click the closed captioning drop down arrow located on the left side of your screen. And this feature will be available throughout the webinar. And just as for information, the closed captioner will use HLS so those using closed captioning should also use HLS to maximize synchronization with the video screen. Okay, if you have a topic specific question today, please feel free to submit it by clicking the ask question drop down arrow to reveal the textbox, type your question in the textbox and click send. And please we tell you this all the time, we ask you please do not enter any sensitive or taxpayer specific information. During the presentation, we will take a few breaks to share knowledge base questions with you. And at those times a polling style feature will pop up on your screen with a question and multiple choice answers. Both the responsibility was correct by clicking on the radio button next to your selection and then clicking Submit. If you don't get the polling questions, it could be because your pop up blocker is on. So now is the time to take a moment to disable your pop up blocker so you can answer the questions. Okay, again, welcome. We are super glad you joined us today for this webinar. And before we move along with our session, let's make sure you're in the right place. Today's webinar is Bankruptcy and the IRS and the webinar is scheduled for approximately 100 minutes. I would like to introduce our speakers. We have Alan Chu and he is an Insolvency Group Manager in Southern California. He has been with the Internal Revenue Service close to 20 years and his first 18 were as a field collection revenue officer. We have Anthony Liburd and he is also an Insolvency Group Manager, he is from Vegas and Salt Lake City. And he has been with the IRS for 15 years and has worked in insolvency since 2013.

And rounding out our presenters is Sabina Makarov, she is an Insolvency Group Manager for Oakland and Sacramento, California and Sabina's experience includes general collection and specialized bankruptcy knowledge. And before I turn it over to the presenters, we have a very special guest on that is going to share opening remarks, Rocco Steco, Director, Specialty Collection Insolvency.

Rocco, you're up. Rocco Steco: Thank you, Karen. Good morning or afternoon everyone, depending on where you're joining us from. I hope everyone's doing well today. As Karen introduced, I'm Rocco Steco, Director, Specialty Collection Insolvency for the IRS. I'm joining you today from Philadelphia, Pennsylvania. On behalf of the IRS Specialty Collection Insolvency, I'd like to welcome and thank you for joining us today for a Bankruptcy webinar. Bankruptcy predates the founding of America and was first introduced in the United States in 1800. Initially, bankruptcy laws only allowed for involuntary bankruptcies filed by creditors and it wasn't until the Bankruptcy Act of 1837 that allows for debtors to file bankruptcy voluntarily. There have been several changes in the law since then, and the Bankruptcy Act of 1978 ushered in what we now know as the U.S. Bankruptcy Code. The most recent significant legislation, the impact bankruptcy was the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or BAPCPA. The key provisions of BAPCPA include requirements that IRS must participate in, such as credit counseling, and how certain debts are handled. In 2019, there were nearly 775,000 Bankruptcies filed in the United States, the number dropped almost 30% in 2020, with approximately 544,000 bankruptcies, which is actually the lowest number recorded since 1986. We have assembled a team of our best subject matter experts that will be delivering this session to you today. And I'm confident you will find this session beneficial and informative. We'll also try and answer as many questions that you may have as time permits. I'll now be turning you over to our first presenter, Sabina Makarov. Thank you again for joining us. Have a great session and have a great day. Sabina Makarov: Thank you, Rocco. Hello, everyone. During this presentation, we'll share what are the roles of Specialty Collection Insolvency departments and staff, what is the accurate ways to notify the IRS of the bankruptcy filing, address the effects of bankruptcy on federal taxes and tax liabilities. And we'll share how to contact insolvency to resolve bankruptcy related and tax issues or questions. So what do we do? Insolvency is a part of small business self employed division collection department, Bankruptcy specialist and advisors work on all bankruptcy chapters. New insolvency program operates with the guidelines of the U.S. Bankruptcy Code 11 USC and the Federal Rules of Bankruptcy Procedure. When notified we administer bankruptcy cases from opening to closing. As you can see on the slide we process liquidation Chapter 7 assets or no assets cases, Chapter 9s, individual and business filing in Chapter 11 and some of which are liquidation cases. We also process Chapter 12, individual Chapter 13 filing and finally, Chapter 15 International filing or work in insolvency as well. We also handle the situation when the cases get converted from one chapter to another. What are we responsible for? Our department is responsible for the accurate administration of the federal tax laws and collection of debtors outstanding for sufficient and full sufficient funds debt during open bankruptcy proceeding. Bankruptcy Law is the prevailing law and authority when taxpayers file for bankruptcy. Bankruptcy laws are separate from tax laws and coordination is necessary to comply with both. So here in insolvency, we are responsible for overseeing that coordination. Complying with part in Bankruptcy Code requires synchronization and specialized knowledge. In insolvency, we ensure that appropriate actions are taken to subside ongoing collection upon the filing of a bankruptcy when it is appropriate to suspend the collection. So I just talked about applicable law that governs insolvency operations. Now I want to share insolvencies composition. Insolvency consists of Field Operations, Field Insolvency, which has offices geographically distributed throughout the nation and our Centralized Insolvency Operation or CIO, located in Philadelphia, Bankruptcy Specialists in CIO are notified of bankruptcy filing, process certain payments from trust fees and handle calls from our 800 number which I will provide in just few slides. CIO specialists also process certain accounts, adjustments and closing case section in most of the chapters. Specialists from CIO and Field Insolvency continuously communicate with one another in order to resolve case related issues and ensure case processing. Now that you know how insolvencies is composed and that there are multiple offices, it is very important to remember how to notify the IRS of a bankruptcy case filings. The correct way to notify the IRS of a bankruptcy filing or notice us regarding any other ongoing case actions is to mail the documents to the address that you see on the slide. Notifications must be mailed to the Philadelphia CIO office, CIO ensures that freezes are input on tax accounts when notifications of the bankruptcy filing is received. So the sooner the IRS is notified properly, the faster the specialist can ensure collection is stopped, if appropriate. We talked about what should be mailed to CIO. However, there are times when other types of correspondence needs to be mailed to the assigned specialist local office. Debtors and their representatives can mail delinquent returns, for pre-petition years or case specific correspondents to the assigned Bankruptcy Specialist's local office. I would like to mention that any returns that are mailed should be signed and dated by the taxpayers for further processing and to avoid any delays. Other documents that are supposed to be mailed to the assigned specialist's attention are plan payments in Chapter 11 and 12s. These payments have to be mailed to the address where the assigned specialist is located. And you can find the assigned specialist contact information on the IRS proof of claim. Otherwise, the debtors can contact centralized insolvency to get the assigned specialist contact information. I want to say that with the beginning of the pandemic, the use of electronic correspondence, such as emails and eFaxs have significantly increased. It is important to remember that when you're emailing the specialist, please ensure not to include debtors' personally identifiable information in order to protect debtors' privacy. It is okay to provide bankruptcy case numbers since this is already a public knowledge information. Please also be sure to include your best call back number. Another significant reminder is we can communicate only with the Attorney representing the debtor in the bankruptcy case or the Power of Attorney but not with attorney office staff members. All right, so have your pen or pencil ready and a piece of paper because I'm going to give you that phone number that I promised earlier. To help you determine whom to contact when you have a bankruptcy related question, I'll share the types of actions that are usually done by the specialist in centralized insolvency and field insolvency and this information will help you make the decision. Centralized insolvency addresses bankruptcy related inquiries from the debtors and their representatives when they call 1-800-973-0424 and the hours of operation are 7 AM to 10 PM Eastern Standard Time.

Centralized insolvency establishes cases on the automated insolvency system. And previously I did mention that the bankruptcy notifications must be mailed to the CIO office in Philadelphia. Once notified of a bankruptcy filing, the CIO specialist will take necessary actions on Chapter 7 no asset cases, including resolving potential violations. Additionally, specialist in centralized insolvency monitor Chapter 13 plans for confirmation, receive and apply Chapter 7 and Chapter 13 disbursements from all trustees in the country, process closing case auctions in Chapter 7 and Chapter 13. And again, if you have questions related to these issues, it is best to reach out to CIO at 1-800-973-0424. Karen Russell: Sabina it's Karen. We've got a lot people writing and asking if you could repeat that phone number one more time. Sabina Makarov: Of course, of course, thank you, Karen. So it's 1-800-973-0424. And as you can see specialist in Centralized Insolvency have a great deal of time sensitive duties to ensure correct case processing from the list that I just mentioned. So to decide if you need to contact in the assigned field specialist, here is what they do. Prepare claims in accordance with the bankruptcy code, file the claims and ensure the court acknowledges the receipt of these claims and secure unfiled returns when the debtor is required to file the return bankruptcy gives taxpayers a fresh start in their personal lives and is also a fresh start on becoming compliant with their federal income taxes. It is important for the debtors to know and comply with their filing requirements to maintain filing compliance as required by the bankruptcy code. So specialists will remind the debtors of missing required returns, such as Form 1040s, Form 941s and will also notify the debtors which forms are required to be filed post-petition, for example Form 1041s in some instances, or Form 941s if the case involves wage paying businesses. Additionally, bankruptcy specialists analyze relevant bankruptcy pleadings for equity in assets to determine when the debtors are required to file pre-petition delinquent returns, and address questions that may come up after pleadings' review. We also refer cases to the Assistant U.S. Attorney's Office or IRS counsel for objections to plan confirmation or to respond to litigation against the IRS. There are instances when field specialists are called as expert witnesses in court hearings. Bankruptcy specialists have found and interview the debtors at the first meeting of creditors to address plan feasibility, unfiled returns, Trust Fund related questions or any other clarification questions that may arise. Field insolvency makes collection determinations and pursues collection from exempt, abandoned or excluded property in some Chapter 7 no asset cases. And in specific situations, negotiates with debtors if warranted. Field Insolvency addresses complex issues that may involve lien priority, lien pay off, refunds, credits on the accounts, litigation against the IRS and trust fund recovery penalty investigations. So if you have questions about any of these issues that I mentioned, then it is best to contact the assigned specialist. And there's a side note all cases have an assigned specialist at all times. Karen Russell: Sabina, pardon me for interruption. You're doing such a great job, but I have a quick question. So what should a power of attorney do if the case is not assigned to a specialist, but he or she has information to submit, or questions that need to be answered. Sabina Makarov: In this situation is best to reach out to CIO to either obtain contact information or provide the information to CIO. And again, the contact number is 1-800-973-0424. Karen Russell: Thank you so much for that. Sabina Makarov: Sure.

Thank you Karen. So far, we've discussed what types of cases issues and duties are worked by the bankruptcy specialist. Let's discuss how bankruptcy filings impacts collection. And automatic stay is an injunction that arises by operation of bankruptcy law when a bankruptcy petition is filed under 11 USC Section 362. Filing bankruptcy usually gives a debtor immediate relief from all demands for payment and collection enforcement actions. The automatic stay is effective as of the date of the filing of the bankruptcy petition. However, there are excepted situations in which the IRS may pursue collection. Post petition and post confirmation liabilities are not covered by the automatic stay. So collection may be pursued. And for clarification, I want to add post petition taxes are taxes that are incurred after the filing of the bankruptcy petition. So automatic stay does not cover collection of taxes that are incurred post-petition.

Pre-petition is the time before the bankruptcy petition was filed. Pre-petition taxes are taxes that were incurred whether or not assessed prior to the filing of the bankruptcy petition. And income taxes are taxes that are incurred on the last day of income tax year. So again for post petition and post confirmation liabilities are not covered by the automatic stay. Collection may also be pursued.

If the bankruptcy plan is defaulted and if collection is not otherwise prohibited. Collection may be continued when a motion to lift the automatic stay filed and approved by the court. Such motion can be filed by any creditor including the IRS. If the specialists and advisors become aware of stay violations, they will work on correcting those as soon as they learn about them. The debtors and authorized representatives can contact the assigned specialist for centralized insolvency to bring the case, to bring the services attention to a possible violation. And a specialist can also identify a potential violation during case analysis and we'll work on resolving it. With that, let me turn it over to you Alan to continue with our presentation.

Alan Chu: Thanks, Sabina. My name is Alan Chu I will present the effects of automatic stay. The automatic stay does not prohibit IRS in conducting a trust fund recovery penalty investigation and trust fund recovery penalty tax assessment. The trust fund taxes are employment taxes calculated by all of the income federal tax withheld and half of the social security and Medicare taxes. An IRS bankruptcy specialist prepares a government's proof of claim including any trust fund tax pending. Bankruptcy insolvency specialist can file an unassessed or estimated claim. An automatic stay does not prohibit IRS Examination to perform audits and send proposed audit result correspondences to debtors in bankruptcy. The debtor can't, I'm sorry the audit can't record on debtor account unless debtor agreed with the audit findings. IRS can't record the audit since debtors can't appeal the proposed audit in bankruptcy. We'll move forward to the next slide on effect of automatic stay. For amended returns and/or original return processing. Doing bankruptcy proceedings, debtors can provide unfiled tax returns to get into filing compliance. Debtors can make a remittance payment with their unfiled tax returns. The remittance payment is considered as a voluntary payment.

In regards to accuracy adjustments, debtors can file amended tax returns to correct original filings or correct a substitute for return filing. IRS bankruptcy specialist will amend the proof of claim to reflect the accurate tax adjustments. Substitute for return, IRS estimated the taxes owe on unfiled tax returns when debtors do not respond to IRS notices for the delinquent tax returns. In an offer and compromise, IRS Bankruptcy will honor the terms of an offer and compromise in the bankruptcy if IRS accepted the offer and compromise before bankruptcy filing date. A new offer is not processable if the debtor is in a bankruptcy case. Innocent spouse, and injured spouse, debtors can file innocent spouse or injured spouse claims in a bankruptcy case. IRS will process these forms for normal procedures and reflect any changes on the proof of claim file for the case.

Hey we'll go ahead and move on to what the effect of an automatic stay as it relates to an installment agreement. Installment agreements are suspended on bankruptcy filing date. IRS cannot receive installment agreement payments in the bankruptcy case. The installment agreement is reinstated after the bankruptcy case closed without charging the reinstatement fee if the user fee was previously paid. All right, Karen we have a polling question. Karen Russell: We sure do. Our first polling question of the day. Okay, audience hopefully you disabled your pop-up blocker so that you can get this polling question. So which one of the following does an automatic stay prohibit? Is it A, trust fund recovery penalty investigation. B, record a Notice of Federal Tax Lien. C, audit examination or D, pursue unfiled returns. So which one of those four does an automatic stay prohibit? Take a moment and click the radio button that best answers the question and quickly send or submit. Which one of these does an automatic stay prohibit? I'm going to give you about five more seconds to make your selection. Okay, we're going to stop the polling and share the correct answer on the next slide. And the correct answer is B. Record a Notice of Federal Tax Lien. So let's see how well everybody did. We have a 47% accuracy rate. So Alan, can you please explain to the audience why B is the correct response. Alan Chu: Yes, Karen. Although the Bankruptcy Abuse Prevention and Consumer Protection Act affectionately referred as BAPCPA has increased the scope of allowable collection actions for cases filed on or after October 17, 2005. Most collection activity taken after a bankruptcy filing a notice of federal tax lien violates the automatic stay. The automatic stay prohibits many actions and may include creating, perfecting or enforcing a lien on a pre-petition periods. A notice of federal tax lien refiling is allowed in bankruptcy. You could find this information in IRM Karen Russell: Thank you for that explanation and expounding on that. So it looks like you're going to go ahead and continue with proof of claim. Alan Chu: Yes, thank you, Karen.

Proof of claim protects government's interest in bankruptcy proceeding. The tax liabilities are identified as three types of claims in a proof of claim. A valid pre-petition Notice of Federal Tax Lien attaches to debtor's property real or personal. Priority claim are taxes with return due dates of less than three years prior to the bankruptcy filing date. Unsecured general claims is a claim that is not secure or priority. Proof of claim includes estimated claims on unfiled tax returns. Hey, our next discussion is on tax return. Debtors must file all required tax returns for periods ending within four years of the bankruptcy filing. The date of the returns' tax year ends not the return due date determines whether a return is pre-petition or post-petition. I have an example for this. The 2020 Form 1040 tax return year ending December 31, 2020 is pre-petition tax period for a bankruptcy file in 2021. Doing bankruptcy debtors must continue to file all required tax returns or get an extension of time to file. For everyone's information. The IRS filing season started on January 24, 2022. The 1040 tax returns filing due date is April 18, 2022 for most states. All debtors are required to file all tax returns to bankruptcy filing date. Debtors requesting an extension of time to file we'll have until Monday, October 17, 2022 to file. During the bankruptcy case, debtors must pay all taxes as they come due. The payment is considered as a a voluntary remittance with post-petition returns filings. Failure to file returns and/or pay the current taxes during the bankruptcy may result in the case being dismissed in most cases. Oh, Karen, we have another poll question. Karen Russell: We do Alan. You're keeping the audience on their toes. Okay, so audience here's our second polling question. So Chapter 13 was filed on January 3, 2021. What is the pre-petition return for this bankruptcy case? So is it A, Form 1040 due on 10/15/2023.

B, Form 1040s for tax years that began and ended prior to January 3, 2021. C, Form 1040s for tax years that began and ended prior to December 31, 2021 or D, Form 1040 due April 15, 2023. So it's a Chapter 13 filed on January 3, 2021. What is the pre-petition return for this bankruptcy case? Take a moment and click the radio button that best answers this question and click submit.

What is the pre-petition return for this bankruptcy case? Chapter 13 that was filed on January 3 2021? Is it A, B, C or D? Okay, I'm going to give you a few more seconds to make your selection.

Okay, let's stop the polling and share the correct response on the next slide. And the correct response is B, Form 1040s for tax years that began and ended prior to January 3, 2021. So let's see how you did this time. Oh 36% accuracy. Okay, Alan, we definitely need an explanation of why B is the correct response. Alan Chu: Yes, the correct response is Form 1040s for tax years that began and ended prior to January 3, 2021. See this is a pre-petition return in this example are returns for years ending prior to January 3, 2021. Income Taxes are incurred on the last day of the taxable period, which is usually December 31 of the respective tax year. You can find this information in IRM Karen Russell: Excellent. Thank you. Okay. And Alan, you're still up.

Let's go ahead and talk about transcript. Alan Chu: Okay, great. Our next topic is on transcript.

Debtors and attorneys may find tax transcripts helpful in determining the amount of unpaid liability, verifying filing of tax returns, determining discharge, and resolving other issue. You can get tax transcripts online by visiting IRS recommends requesting a transcript online since online is the fastest method. Another way you can request a tax transcript is completing Form 4506-T, which is the request for transcript of tax return.

This request will provide your tax transcripts by mail. And a third method you can get tax transcripts is by calling 1-800-908-9946. Let me provide this telephone number again it's 1-800-908-9946. Another method for you to receive tax transcripts is through e-service, which is available for tax professionals to secure the tax transcript through transcript delivery system or better as known as TDS. And you can also access the website searching e-service to get tax transcript. Next discussion will be on refunds and offset. Per federal tax law, IRS may apply a tax overpayment to unpaid tax liability, before refunding the difference through to taxpayers. Filing a bankruptcy petition does not prevent this right to offset. Although the offset may be subject to an automatic stay. In bankruptcy proceeding, the automatic stay prevents post-petition tax periods' credit to offset pre-petition tax periods. I have an example for this. In general cases, bankruptcy filed on January 3, 2020. The overpayment credit for a 2021 Form 1040 year ending December 31, 2021 is the post-petition period and it can't offset a pre-petition 2016 Form 1040 tax return year ending December 31, 2016. I apologize for that. Now we'll go ahead and discuss about credit offsets is not subject to an automatic stay. If the tax overpayment and liability are for income tax period that ended before filing of the bankruptcy petition date. For example, if you file a bankruptcy petition in February 2021. The IRS may offset an overpayment of tax from your 2020 income tax return against a 2019 tax liability before refunding the difference to you. This applies even though you may file your 2020 tax return after your bankruptcy filing date. IRS issues refund credits to debtor or trustees when appropriate. Our next discussion will be on bankruptcy specialist role at first meeting of creditors. Some of you may know as 341 meeting. IRS may question debtors under oath for unpaid tax liabilities or unfiled tax returns.

IRS can ask questions on business payroll records. Bankruptcy specialists can perform trust fund recovery penalty interviews for bank checking account signing authority, bank account information, business financials and assets and employment records to name a few. IRS can discuss self employment tax issues. For example, we could ask questions regarding your quarterly estimated tax payments, the type of self employment business and where is this self employment business location.

IRS can question the value of an asset. Some of the questions are fair market value of the assets and type of assets. IRS also give deadlines for unfiled tax returns and will advise debtors on the consequences if they do not file these tax returns by the deadline. In most cases, the consequence is usually a dismissal of the bankruptcy case. IRS questions bankruptcy feasibility and unreported income. Our next discussions on exemptions to discharge. In the Chapter 13 bankruptcy case, trust fund taxes are not dischargeable. Taxes based on fraudulent tax returns are not dischargeable Taxes due on unfiled returns are not dischargeable. The tax liability is estimated on the proof of claim. Taxes due on returns filed late and after the date that's two years before the petition date.

For example, bankruptcy filed on January 3, 2020 you filed a 2015 Form 1040 return year ending December 31 2015 within two years before January 3 2020, the 2015 tax liability is not discharged. On Penalties, penalties may be dischargeable while the tax is not dischargeable. The tax survives the bankruptcy filing. Hi Anthony, I will turn the presentation over to you to discuss exemptions to discharge. Anthony Liburd: Thanks, Alan and hi everyone. Thanks again for your attendance today. My name is Anthony Liburd and I will continue with the rest of the presentation.

But first I just want to say just as a reminder that the following information is strictly for a general response, not a case specific question. So the next section that I will cover is exception to discharge. First, I'd like to say that discharges are not granted in Chapter 7 Corporate Bankruptcies, Chapter 7 Partnership Bankruptcies or in Chapter 7 Bankruptcies filed by LLC. This duscharges are also not granted in liquidating Chapter 11 cases and the following are BAPCPA exceptions to discharge Corporations and LLCs that reorganize in Chapter 11 are also excepted from discharge under 11 USC subsection 1141(d)(6)(B) with respect to taxes for which the debtor made a fraudulent return or willfully attempted in any manner to evade or to defeat such tax. Also, an individual or joint debtor may not be eligible to receive a discharge in the current case if they received a discharge in a prior bankruptcy case. Eligibility is determined by the type of bankruptcies filed and the petition date of the prior bankruptcies. Now the exceptions to discharge will include priority taxes including Trust Fund taxes. And of course, remember that the trust fund recovery penalty is not dischargeable even when the trust fund recovery penalty assessment date is more than three years prior to the bankruptcy petition date. Now for cases filed post BAPCPA, the trust fund recovery penalty is non-dischargeable even if the trust fund recovery penalty has not been assessed. It does not matter if the trust fund recovery penalty has been claimed. Both for example, if a Chapter 13 is determined to be responsible for pre-petition trust fund taxes, the trust fund recovery penalty can be assessed and collected after discharge has been granted by the court even though the liability was not included on a proof of claim in the Chapter 13 case. Now also you have those gap period taxes, which are those tax liabilities and penalties, which accrue during the interim period after involuntary bankruptcy case is filed and before an order for relief is entered. You also have taxes due on returns filed late and after the two years before the petition date. We also have taxes due on unfiled returns also taxes based on fraudulent return. You also have certain restitution based assessment and corporation and LLC or a limited liability company are exempt from discharge on taxes based on fraudulent returns. Note, penalties may be dischargeable while tax is non-dischargeable. Well, Karen, did I hear you say there might be another poll question? Karen Russell: Yes, I'm talking away. Yes, it is time for our third polling question. Okay, and this is about discharge. So which situation is not an exception to discharge?

Is it A, fraudulently filed turn, B, trust fund recovery penalty assessment, C, unfiled return or D correctly filed Form 1040 received more than three years prior to the current bankruptcy petition date. So which situation is not an exception to discharge? Is it A, B, C or D? Take a moment, read the question. Let it roll around in your brain a little bit, and then click the radio button next to the response that best answers this question. And I'm going to give you a few more seconds. Okay, let's stop the polling and share the correct answer on the next slide. And the correct response is D, a correctly filed Form 1040 received more than three years prior to the current bankruptcy petition date. Let's see how everyone did, 47%. Okay, Anthony, we need an explanation please of why D is the correct response. Anthony Liburd: So Karen, no problem. Now, exceptions from discharged when an individuals under the 11 USC 523(a), the following taxes and related interest are not discharged on individual Chapter 7, Chapter 11 or Chapter 12 bankruptcy.

Though you have priority tax claims, except priority administrative claims, and trust fund recovery penalty is priority tax. Also of taxes for which a return was not filed under 11 USC 523(a)(1)(B) for taxes for which the late file return was filed within two years of the bankruptcy filing. And lastly, we have taxes for which the debtor filed a fraudulent returne or willfully attempted to evade or defeat the tax. Therefore a correctly and timely filed Form 1040 received more than three years prior to the current bankruptcy petition date is dischargeable and not excepted from discharge. And you can find this on IRM Karen Russell: Thank you for that Anthony. That really is helpful information. So it does look like you're going to continue with exempt property which is our next topic. Anthony Liburd: Yes, that's right, Karen. Thank you.

Well, the next topic of discussion will be exempt property. Now when it comes to exempt property that was included in the bankruptcy estate, and exempted by the debtor is not liable for the discharged tax debts after the bankruptcy unless a Notice of Federal Tax Lien was filed before the bankruptcy. Now you can see under 11 USC 522(c)(2)(B) depending on state law. A debtor may choose between state and federal exemptions. Now, only individuals can exempt property, such as a homestead, vehicles or personal furnishing. And a couple of important points to remember is that the law allows for collection of discharged taxes from exempt property that's secured by a valid Notice of Federal Tax Lien filed against the debtor before the petition date. And of course, property exempt by either state or federal law, such as a 401(k) retirement, household good and homestead. Now, the next topic to discuss will be excluded property. Now, while certain property interests are excluded from the bankruptcy estate, this means that the property interest does not become property on the bankruptcy estate upon the petition date and one such property is ERISA qualified pension plans that are generally excluded from the bankruptcy estate under 11 USC Section 541(c)(2). Now for cases filed on or after October 17, 2005, certain educational IRAs subject to limitations may also be excluded under 11 USC Section 541(b)(5) and (6). This extends if a retirement plan is not ERISA qualified, it may be exempt from the estate under 11 USC Section 522. Now a couple of important points to remember is that Notice of Federal Tax Liens are not necessary to collect from excluded property. While with proper approval, insolvency can issue levies on excluded property before closing the case. Our next topic I'll discuss will be abandoned property.

Now, under the bankruptcy code, the bankruptcy court may permit the trustee to abandon any property of the estate that is burdensome, or of inconsequential value to the estate. Now, a couple of important points to remember is that the Notice of Federal Tax Liens aren't necessary to collect from abandoned property. So with proper approval, insolvency can issue levies on abandoned property before closing the case. I believe we have another polling question Karen.

Karen Russell: We sure do, we sure do. So audience in this case, in this situation, we are going to ask you to select the correct response that completes the sentence. Okay, so the bankruptcy, the sentence is, the bankruptcy code allows post discharge collection from exempt, abandoned and excluded property A, when all liabilities are not dischargeable. B, when there is a dischargeable liability, C when the retirement plan is ERISA qualified, or D when the trustee liquidates the property. Okay, so which of those responses correctly complete that sentence? The bankruptcy code allows post discharge collection from exempt, abandoned and excluded property when what? A, B, C or D, take a moment and click the radio button that best answers the collection of the question, not collection, the question and click submit, which of those responses correctly completes that sentence? Okay, I'm going to give you just a few more seconds to answer the question before we close out polling. Okay, so let's go ahead and stop the polling and share the correct response on the next slide. And the correct response is B, the bankruptcy code allows post discharge collection from exempt, abandoned and excluded property when there is a dischargeable liability. All right, so let's see how everyone did. Okay, we have a 23% accuracy rate. So, Anthony, if you would please explain why B is the correct response so that the audience can understand for any information that you shared, yes, okay. Anthony Liburd: No problem. Thanks, Karen. Thanks, no problem. Thank you.

Well, if the service has properly filed a pre petition, Notice of Federal Tax Lien, and the Notice of Federal Tax Lien is still valid. The Notice of Federal Tax Lien survives the bankruptcy discharge. And that can be found under 11 USC Section 522(c)(2)(B). Thus the service may collect discharged taxes from property that is exempt from the estate, if a valid Notice of Federal Tax Lien was filed pre-petition, now the service statutory lien survives the bankruptcy when there are abandoned or excluded assets to which the lien attaches. A Notice of Federal Tax Lien is not required to pursue collection from the abandoned or excluded assets after the bankruptcy discharge and that can be found under IRM Karen Russell: Thank you for that, Anthony. So the big thing is, is that the code and the IRM can help with any questions that the audience may have. Okay, so it looks like you're going to talk about how to resolve issues with the IRS. Let's go forward.

Anthony Liburd: Thank you, Karen. Now, the next thing I want to highlight, of course, is that there's many issues that can be resolved by contacting the IRS. Now, you should contact the bankruptcy specialists assigned to your case. Now, of course, a couple of important points to remember is that you can find the specialist's name and contact information at the bottom of the proof of claim or the assigned specialist managers contact information. Now, you can also contact centralized insolvency operations or CIO at 800-973-0424. And I'll provide that number one more time at CIO at 800-973-0424 if a proof of claim hasn't been filed. Now, of course the assigned specialist is the best resource for resolving questions about the claim and other issues with unfiled returns, plans or plan payments. Now the next topic I want to discuss will be Electronic Federal Tax Payment System or Trustee Payments. Now, I'll provide you some steps on how to get started making payment using EFTPS. So a Chapter 13 bankruptcy trustee can submit a completed Form 14781 Electronic Federal Tax Payment System insolvency registration. After that you will receive your EFTPS registration number and then you will need to work with the software provider and bank to set up the electronic funds transfer for making your EFTPS claim payments via ACH. Now, individuals, businesses and trustees can electronically deposit and pay federal taxes using the EFTPS system or Electronic Federal Tax Payment System. Now if you're a new business that indicated a likely federal tax deposit liability when you apply for your EIN, you're pre-enrolled. You should have received a letter with your four digit EFTPS PIN. Now if you didn't, you can call 800-555-4477. And when you give the agents your EIN, he or she can provide you your PIN. Now this is the only situation in which your PINs are given over the phone. And it is because you haven't yet added your banking information to your enrollment. So to activate your enrollment, so you can make payments using this service, you will need to call 800-555-3453. Then you'll be asked to enter your EIN, PIN, your banking information and a contact phone number. Then you'll receive your 18 digit enrollment number, which can be used in creating your internet password. Now, as soon as you finish the call successfully, you can begin scheduling payments. Now, if you want to make payments as an individual taxpayer or for a business that wasn't pre-enrolled, click on enrollment and follow the instruction. And in five to seven days after you submit your enrollment, you'll receive your PIN and enrollment number via U.S. mail. Now if you need to schedule a payment before you receive your PIN, you can call 800-555-4477 two business days after completing your enrollment, if the information you provided matched the IRS records, an agent can take your payment. Though for security reasons, the agent will not be able to give you your PIN over the phone. Well of course, there are some benefits to using EFTPS. Such as you submit your claim payments securely, you will use which is available 24/7. And you will eliminate printing and mailing costs of paper payments. You'll also receive immediate confirmation of payment and of course access to 16 months payment history. You can also schedule payment in advance. And then my next topic of course will be prompt determination. Now, trustees may ask the IRS to make prompt determination of any unpaid liability of the estate for any tax incurred during administration of the case. Now trustees can submit tax returns and requests for prompt determination of the return to centralize insolvency operation by mail to the following address, which is Internal Revenue Service, P.O. Box 7346 in Philadelphia, PA at 19101-7346. Now of course, you do have eFax which is currently a virtual pilot, but it will need to be marked Requests for Prompt Determination. Now, of course there are some additional steps that must be completed for the request. And those are as follows. It must be requested in writing, signed and submitted to qualify as valid a return must meet certain criteria, including a signature under penalties of perjury. A document modified doesn't qualify as a valid return. Now you must also include a statement that request is for prompt determination of tax liability, specifying type of return and tax period. The name and location of the office where the original return was filed. The name of the debtor, the debtor's taxpayer identification number, the type bankruptcy estate, the bankruptcy case number and the location of the bankruptcy court. Now it is important to remember that a request is incomplete if it missing information. Now Centralized Insolvency Operation or CIO will return incomplete packages with Letter 5948 missing information for prompt determination 505(b) Request and request resubmission with correct documentation. Now new timeframe start when insolvency receives the complete package. Now, once the complete package has been received the CIO forwards the complete package by overnight courier to the appropriate function for processing. And the process for efax, Virtual Pilot, is a little different in that the complete packages sent by e-fax are added to a shared drive for processing by the designated function. And then of course, it's fastest and most cost effective for all parties. And it does allow for better tracking and processing time. Now Karen, I think we have one more polling question. Karen Russell: We do. We certainly do. So, audience this is our fifth and final polling question. Okay, and I'm, I'm shooting for a 100% from the audience.

Okay, so what is the correct address to mail or fax a prompt determination? Is it A, IRS insolvency P.O. Box 7346, Philadelphia, Pennsylvania 19101-7346. B, the IRS mailroom at 111 Constitution Avenue in Washington DC 20221. C, IRS insolvency at 1301 Clay Street in Oakland, California 94612, or D, any IRS local office. So again, what is the correct address to mail or fax a prompt determination? Is it A, B, C or D? Take a moment and click the radio button next to the answer for this question and then click submit. What is the correct address to mail or fax the prompt determination? Okay, I'm going to give you a few more seconds to make your selection before we close out the polling. Okay, we are going to stop the polling now and share the correct answer on the next slide. And the correct response is A, IRS Insolvency in Philadelphia. Okay, let's see how everybody did. 85% accuracy way to go. I am going to have Anthony give a little bit more of an explanation of how and why it's so important to make sure that you mail this the prompt determination to this address.

So Anthony, if you would go ahead. Anthony Liburd: Okay, thank you, Karen. And that's a great score on that one. Now, for prompt determination processing, you must forward the complete request. Like I said to PO Box 7346 in Philadelphia, PA 19101. I guess that this is the correct address for that request. And it must be complete. Karen Russell: Yes, that's the kicker, it must be complete. The request must be complete. Okay, Anthony, it looks like you're going to go over resources for the audience that they can refer back to. Anthony Liburd: Thank you, Karen. Now, before I conclude my section of this webinar, I do want to provide you the following IRS resources that are always available in multiple languages. Now first, the resources can be found at and you would just search under bankruptcy. Now this will provide you access to currently 225 items right at your fingertip. Now remember, information is general and may not cover your case specific questions. But some useful information to start with will include Publication 908 or better known as the Bankruptcy Tax Guide. Now, this explains the basic federal income tax aspects of bankruptcy, such as the bankruptcy code that requires Chapter 13 debtors to file all required tax returns for tax period ending within four years of the debtors bankruptcy filing or as requested. All such federal tax returns must be filed with the IRS before the date of the first meeting of creditors. Now for debtors filing bankruptcy under all chapters, Chapter 7, Chapter 11, Chapter 12 and 13. The Bankruptcy code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the bankruptcy code. So if a debtor does not file required returns within the 90 days after the request is made, the bankruptcy courst must dismiss or convert the case. Now, you have tax returns and payment of taxes in Chapter 11 cases. And the bankruptcy code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the order for relief, or the bankruptcy petition date in voluntary cases is cause for a dismissal of the Chapter 11 case, conversion to a Chapter 7 case or appointment of a Chapter 11 trustee. So failure to timely file the returns can prevent confirmation of a Chapter 13 plan and result in either dismissal of a Chapter 13 case or conversion to a Chapter 7 case. Now, the next document I wanted to you to pay attention to and look at will be Publication 5082. Now, Publication 5082 is What you should know about Chapter 13 Bankruptcy and Taxes. It provides answers to the common questions about the Chapter 13 bankruptcy. This is some basic information that you should consider providing to your clients following Chapter 13. With the publication 5082 it has what return is due, it provides what return to file, it provides responses for, what must I file? What will happen if I don't file and additional website information and a lot of different information to assist your taxpayers with filing Chapter 13. Now last but not least, you do also have the Internal Revenue Manual 5.9. Now, I'm going to go ahead and turn it back over to Karen to cover some questions. And I hope we do have some. Karen? Karen Russell: Thank you, Anthony. And yes, there are plenty of questions. And Hello again, everyone. It's me, Karen Russell, and I will be moderating the Q&A session. So before we start, I want to again, thank you for attending today's presentation, Bankruptcy and the IRS.

And earlier I mentioned way at the beginning of this is that we want to know what your questions are and what you have for our presenters. And here is your opportunity. So if you haven't input your questions, there're still time. So just click on the drop down arrow next to the ask question field, type in your question and click send. So I want to welcome Lynda Walker and Kim Wheelock to the webinar. Lynda and Kim are bankruptcy and insolvency subject matter experts. And Lynda and Kim have extensive experience working in the insolvency operations and we'll be answering your questions today. So we've got some real powerhouses on with us. So before we start, I want to let you know that we may not have time to answer all the questions you've submitted. But we will get to as many as time allows for so. Let's go ahead and get started with that. All right, So Kim, I've got a quick a biggie for you right off the bat. What is the difference between a business that files a Chapter 11 versus a business the files a Chapter 7? Kim Wheelock: Thank you, Karen. And thank you all for attending the question-and-answer session. So it would be difficult to list all the differences between the Chapter 11 versus the Chapter 7. And given the time restraints, I will not attempt to do that here in this forum. But one of the most obvious differences is that most businesses file a Chapter 11 bankruptcy to reorganize their business while they repay creditors under a plan of reorganization. They may also file to liquidate their business as a debtor in possession get up liquidating and Chapter 7 with a court appointed trustee. And in the case of a Chapter 7, the business ceases to operate under this bankruptcy code, title 11 USC subsection 721 authorizes the SEP Chapter 7 trustee to operate the business of the debtor for a limited period. Operation must be in the best interest of the estate and be consistent with the orderly liquidation of the estate. The trustee will then pay the creditors through the liquidation and distribution of the debtors assets. Karen Russell: Thank you, Kim. That was great information. Okay. So Lynda, we have got a question from the audience about does bankruptcy eliminate debts owed to the IRS? Lynda Walker: Okay. Thanks, Karen. So this has to be evaluated on a case-by-case basis, some debt are non-dischargeable under bankruptcy code, and they will remain even after discharge. So some examples of non-dischargeable debt would be trust fund taxes, asset based on fraudulent returns or willful attempt to evade or defeat the tax.

Unfiled return taxes due on returns filed late and within two years before the petition date. So that discharge can be granted to an individual who files a 7, 11, 12, or a 13. And it's also discharges can be granted to corporation, partnerships and LLCs that reorganized in 11 or 12. But I will note that discharges are not granted to corporations, partnerships, LLCs that file a Chapter 7 bankruptcy. And discharges are also not granted to a liquidating Chapter 11 case. It's also it's really important to note that in most cases, a non-petitioning spouse would not be able to reap the benefits of a discharge. If a couple filed a joint return showing a liability and they're both liable for that debt, only one person. So in that scenario, if only one person filed bankruptcy, the non-petitioning spouse will still owe any unpaid portion of the liability. The exception to this is in community property state. So I have a list here of all the community property states, that would be Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin, and Puerto Rico, and Alaska has the option to elect community property. So the non-petitioning spouse would receive a hypothetical discharge in these states. The discharge is only as good or only good as long as the spouses remain subject to that community property laws in the state that they're living. So that's determined by that state where they live. So long as they're alive, they remain married, and they live in one of those states mentioned. Karen Russell: Thank you for that. So you had to research those community property states on. Thank you.

That was good information. So, Kim, I think back to you. And a CPA would like to know if trust fund taxes can ever be discharged in a bankruptcy? Is there ever a situation where that occurs?

Kim Wheelock: That's a good question. And that's a question that we get quite frequently. The trust fund recovery penalty, or the TFRP is a withholding tax for bankruptcy purposes. The TFRP is assessed to reimburse and compensate the government for actual loss of unpaid withholding taxes.

That TFRP is not dischargeable even when the TFRP assessment date is more than three years prior to the bankruptcy petition date. So for cases filed post BAPCPA, the TFRP is non-dischargeable.

Even if the TFRP has not been assessed, it doesn't matter if the TFRP has been claimed. And for those of you that do not know, post-Bankruptcy Abuse Prevention Consumer Protection Act, or BAPCPA are for those cases filed after October 17, 2005. Karen Russell: Okay, thank you for that. And thank you for explaining the, our acronym BAPCPA. Okay, so, Lynda, we've got a question from an enrolled agent. And they said if a taxpayer is in Chapter 13 bankruptcy and filed a current year return that shows a refund, will it be offset or will it be released? And if it's offset, can you explain why and if it's released, can you explain why? Lynda Walker: So this is, this is a pretty common question. The IRS has the right to offset pre-petition refunds for pre-petition liability. So, if the refund is in that scenario, if it's the tax return, the tax period ended prior to the petition date its considered a pre-petition period. If that in some time, like right now, you'll have a scenario where they filed their bankruptcy maybe in January like right today 2021 tax return is a pre-petition period. So your pre-petition refund for 2021 can be offset, to liabilities in that bankruptcy, the bankruptcy filed today, that would be a pre-petition to pre-petition offset. If the refund is a post-petition period, then it should be released. So if your taxpayer filed bankruptcy in November of 2021, the tax period hasn't ended yet. So that period when it becomes or when the tax period ends is December 31 of 2021. So it is a post-petition period when they file it, that refund should be released to the debtor. However, it's important to remember that the refund may still be subject to offset to other non-IRS debt. So state taxes, child support, so on and so forth. Karen Russell: Great, that was a really good explanation. Thank you especially about pre-petition and post-petition. Okay, so Kim, let's find out about penalties can penalties being discharged through bankruptcy. Kim Wheelock: So, generally penalties such as failure to pay, failure to file estimated tax penalty, just to name a few, they are dischargeable when the transaction or event that gave rise to the penalty occurred more than three years from bankruptcy petition. So it's important to note. So when I say transaction or event, that is the date, and it may vary according to the date the event occurred, and according to the type of penalty, for example, an extension for filing a return is not an extension for paying the tax. So the event date for the failure to file penalty is changed by an approved extension for filing the return because that failure to file penalty is based on the extension date and not the original date. The event date for the failure to pay penalty is not changed by an approved extension filing the return. And the reason behind that is because even though you may receive an extension to file, you still have to pay by the original return due date. Karen Russell: Thank you. Thank you for that. Okay, so, Lynda. We have a question about active installment agreements.

And the CPA in the audience wants to know does filing a bankruptcy terminate an active installment agreement. Lynda Walker: So an installment agreement is considered to be suspended by the bankruptcy filing, it not terminated. So after an installment agreement becomes effective, the Internal Revenue Code limits the conditions terminating such an agreement. A bankruptcy petition is not one of them. An installment agreement is considered to be suspended by the bankruptcy not terminated. It is important to note here that a termination of an installment agreement while the taxpayer is in bankruptcy, could be viewed as an act to collect the underlying tax liability and hence the violation of the automatic stay. Karen Russell: Thank you. Okay, Kim. Hold on, I'm pulling through these questions. Okay. How are taxes and the bankruptcy estate handled? Kim Wheelock: So, when an individual files a bankruptcy petition under Chapter 7 or an 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. The court appointed trustee or the debtor in possession is responsible for preparing and filing all of the bankruptcy estate tax returns, including its income tax return on Form 1041 and paying taxes, the debtor remains responsible for filing his or her own returns on Form 1040 or 1040-SR tax returns and paying taxes on income that does not belong to the estate. Now, for Chapter 13 or 12, the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, which is the Form 1040 or the Form 1040-SR. Karen Russell: Okay, got it.

Lynda. So someone, there's a question about dollar criteria. And they were wondering, is there a dollar criteria or what is dollar criteria to be eligible to file a Chapter 13 bankruptcy? Lynda Walker: Okay, so, I'm going to get a little bit more specific than that. In order to be eligible to file a Chapter 13 bankruptcy, you must be, the debtor must be an individual, or an individual and a spouse who can file a joint petition and stockbrokers, commodity brokers, they cannot file a Chapter 13 case, the debtor must also have regular income, that would include self employment income, their non-contingent liquidated, secured debt must total less than $1,257,850. And their non-contingent liquidated unsecured debt must total less than $419,275. Now I'll also note that these limitations became effective on April 1 of 2019. And the debt ceilings are for the total of all debt, not just past debt. And the final criteria was established that the debtors excuse me are required to go under credit counseling within 180 days prior to the filing of the bankruptcy petition. Now, I'll also note that the dollar amount for the Chapter 13 criteria are adjusted every three years to reflect changes in the consumer price index. And the next three year automatic adjustment will occur on April 1 of 2022. Karen Russell: That is really good information. And Lynda, there was a follow-up question, what is non-contingent, non-contingent liquidated secured debt must total less than, is that not something? Lynda Walker: No, not that I'm aware of. I don't know the dictionary, explanation for non-contingent, but it would have to be a debt that a monetary debt that's owed not necessarily that I gave you a cow and that and you were supposed to work for me for two hours. Karen Russell: Got it, got it. Okay. So but the big thing, the big takeaway with that are the debt ceilings, and it's a combination of all debts and not just tax debt. Okay, good. So, Kim, what happened to debtors tax liability, if the IRS does not receive notice, or the IRS received a late notice of the debtors bankruptcy. Kim Wheelock: So under the bankruptcy title 11 USC Subsection 523, it provides that an individual debtor is not discharged of a debt, if the creditor does not receive notice in time to file a timely proof of claim because the debtor failed to include the creditor on the schedule and statement. This provision does not apply if the creditor otherwise timely notice, or actual knowledge of the case. This provision applies to Chapter 7 assets, Chapter 11, Chapter 12 and Chapter 13 cases, it does not apply to Chapter 7 no asset cases, because in a Chapter 7 no asset case, there's no proof of claim that was filed. I did also want to mention, Karen, I did see a question also asking if the debtor doesn't owe any taxes that they should provide notice to the Internal Revenue Service and my answer to that is in addition to that is yes, I would always notice the IRS just in case, there's something out there that the debtors Attorney is not aware of. So yes, always notice the Internal Revenue Service.

Karen Russell: Okay. Yes, because I noticed that too, what is the reason to notify the IRS for bankruptcy filing and not that you just answered that. So thank you for that. Okay. And, Lynda, let's talk about automatic stay. So how does the automatic stay affect the statute of collections on an IRS debt? Lynda Walker: Well, the running of the statutory period for collection is suspended while the bankruptcy cases open. In or in the case of a Chapter 11 filing, the statute is suspended post confirmation during the period in which the confirmed plan provides for the payment of the tax debt. And the plan is not in a substantial default. So basically, in a Chapter 11, if they're making their payments timely, and their plan has been confirmed, everything fits in the statute will be suspended. I'll also note, if a debtor has non-dischargeable debt, or they've been dismissed, the statute is recalculated to account for the time spent in their bankruptcy.

Karen Russell: Which adds to the statute. Lynda Walker: That's correct. Karen Russell: Okay. Lynda Walker: Absolutely would extend it. Yes. Karen Russell: Okay. Well, thank you for that. So that is important to remember. Okay. And Kim, here we go. Can a bankruptcy be dismissed for not filing post-petition tax return? Kim Wheelock: For individuals, there is no bankruptcy code provision, specifically describing a requirement for individuals to file post-petition tax return, filed prior to October 17, 2005. However, in the bankruptcy code, it does under subsection 521, it does provide that if the debtor or is in a Chapter 7, 11, 12 or 13 bankruptcy filed after October 17, 2005. If he fails to file tax returns that become due after the commencement of the case, the service may request the court to convert or dismiss the case. Debtors in Chapter 11 bankruptcies filed on or after October 17, 2005 conversions to Chapter 7 or dismissal if they failed to file tax returns due after the date the order of release or failed to pay taxes owed after the position date in a timely manner. Karen Russell: Great, great. Thank you, Kim. I'm looking at these all the questions that we're getting. And I just came across one and it says and I'm going to throw it out to both of you. And it says I'm still unclear when the IRS can issue a Notice of Federal Tax Lien when the taxpayer is in bankruptcy. Can you clarify when that is possible? Kim Wheelock: So Karen, this is Kim. And I'll go ahead and answer that question. So a Notice of Federal Tax Lien, or an NFTL filed during a bankruptcy is in violation of the bankruptcy estate. During an initial review, and when the case is first assigned to a specialist. They do review to see if a Notice of Federal Tax Lien has been filed during the bankruptcy stay, if it is found that it was filed it is promptly withdrawn. Karen Russell: Great. I've got another really good one. And I'm going to just put it out there for either you, Kim or Lynda to answer. Can a bankruptcy be properly filed without an attorney? Lynda Walker: So this is Lynda. I'll take that one. Actually the debtors can file what is considered pro-se so they would have to complete all of their schedules, their forms and everything in file the bankruptcy themselves. IRS will still work with a taxpayer whether they have an attorney to represent them or not. Karen Russell: Terrific. Okay. Thank you, Lynda.

That's all the time that we've got for questions. So audience that is it for our Q&A. Again, I want to thank our speakers and our subject matter expert for being on, sharing their knowledge and expertise and for answering your questions. And before we close the session Sabina I'm going to turn it over to you, for you to talk about key points that you want the attendees to remember from today's webinar. Sabina Makarov: Thank you, Karen. It is remember to bring the filing current pre-petition and keep current with the federal tax deposits and estimated payments and required filings post petitions because incompliance may lead to bankruptcy case dismissal, and returning case to the regular collection. Timely and correctly notifying the IRS of bankruptcy filing is important. Otherwise, liabilities may not be dischargeable. And if you have any questions on the IRS proof of claim, please reach out and communicate with the assigned IRS bankruptcy specialists.

Another point is please sign up to use Electronic Federal Tax Payment System or EFTPS to make plan payments, it helps to reduce errors. It helps with faster payment processing. When you're preparing a plan, a payment plan for bankruptcy estate. Payment plan must adequately provide for IRS claims, including statutory interest on secured claim in order to avoid objection to the plan confirmation. If the Notice of a Federal Tax Lien is filed, the IRS is a secured creditor. Last but not least, bankruptcy specialists can only communicate with attorneys representing the debtor in bankruptcy. And only while the case is open. Information can be shared with the power of attorney with a valid Form 2848 only. All other attorney office staff is not authorized to receive taxpayer's information from the IRS. And Karen, that's it for me.

I'll turn it over to you. Karen Russell: Thank you very much, Sabina. I appreciate that. Okay, audience. We are planning additional webinars throughout the year. And our final webinar in January is Keys to mastering due diligence requirements and it's scheduled for January 27, 2022. And that is this Thursday, two days from now, yes. And so go ahead and register if you haven't already done so. And to register for any upcoming webinar, visit keyword search webinars and select Webinars for Tax Practitioners or Webinars for Small Businesses. And when appropriate, we will offer certificates of completion for upcoming webinars. We do invite you to visit our video portal at And you can view archived versions of our webinars and remember, certificates of completion are not offered if you view an archived version of any of our webinars on our portal. Again, a huge thank you to our speakers and subject matter experts for a great webinar and for sharing their experience and expertise with us and for answering your question. So if you attended today's webinar for at least 50 minutes after the official start time, you will receive a certificate of completion that you can use with your credentialing organization for one possible CE credit. If you attended for at least a 100 minutes after the official start time, you will receive a certificate of completion for two possible CE credits. And again, the time I spent chatting with you before the webinar started at the top of the hour does not count for the 50 or 100 minutes. If you're eligible for continuing education from the IRS and registered with your valid PTIN. Your credit will be posted to your PTIN account. If you qualify and haven't received your certificate or credit by February 15. Okay, February 15, not anytime sooner, February 15. Please email us at So we can check into it for you. And the email was on the slide as well. And if you're interested in finding out who your local stakeholder liaison is, you can send an email to this address as well. And we can send you that information. Or you can check out and find out who your local stakeholder liaison is there. We would appreciate it if you would take a few minutes to complete a short evaluation before you exit. And if you'd like to have more sessions like this one, let us know. And if you have thoughts on how we can make them better, let us know that too. If you have requests for future webinar topics or pertinent information you would like to see in an IRS Fact Sheet Tax Tip or FAQ on Please include that in your suggestions in the comment section of the survey, and you can click on the survey button on the right side of your screen to begin. And again, if it doesn't come up, just check to make sure your pop-up blocker is disabled. It has been a real pleasure to be with you and on behalf of the Internal Revenue Service and our presenters and subject matter experts. We want to thank you for taking time out of your busy schedule to attend this webinar. It's important for the IRS to stay connected with the tax professional community, individual taxpayers, industry associations along with federal state and local government organizations because you make our job a lot easier by sharing the information that allows for proper tax reporting. Thank you again for your time and attendance. And we wish you much success in your business or practice. You may exit the webinar.