Yvette Brooks-Williams: Again, welcome. We are glad you've joined us for today's webinar. And before we move along with our session, let me make sure you're in the right place. Today's webinar is Bankruptcy and the IRS and the webinar is scheduled for approximately 120 minutes.

And let me introduce to you today's speakers. So Alan Chu is the Insolvency Group Manager for Los Angeles, Laguna Niguel, San Bernardino and San Diego. He has been with the Internal Revenue Service close to 22 years and has worked in field collection and specialty insolvency. We also have Anthony Liburd. He is the Insolvency Group Manager for Las Vegas and Salt Lake City. He has been with the Internal Revenue Service for 17 years and has worked in insolvency since 2013. Next we have Sabina Makarov, and she is the Insolvency Acting Territory Manager from Oakland, California. Sabina's experience includes general collection and specialized bankruptcy knowledge.

But before we turn it over to Alan to start the presentation, I'd also like to introduce to you Richard Goldstein. Richard is the Internal Revenue Service Acting Director of Specialty Collection Insolvency for the Small Business/Self-Employed division. Richard has more than 30 years of government service and has been with the Internal Revenue Service for more than 28 years. Richard is a 1987 graduate of the College of William &; Mary, earned his Bachelor of Arts degree in Economics and Government. Richard obtained his Juris Doctor degree from the Georgetown University Law Center in 1992. Richard, the floor is yours. Richard Goldstein: Thank you, Yvette.

I'm excited to see so many individuals who have joined our webinar on Bankruptcy and the IRS.

Specialty Collection Insolvency is proud of our record of providing exceptional service to debtors, practitioners, trustees, and others impacted by bankruptcy proceedings on the application of the tax law in these proceedings. Today's presentation is a continuation of our mission to help taxpayers understand the role of the tax law in bankruptcy. Welcome, and please enjoy our presentation. I'll now turn it over to our panel of experts. Alan? Alan Chu: Thank you, Richard. Good morning or good afternoon, depending on where you are located. I am Alan Chu. Thank you for joining our webinar on Bankruptcy and the IRS. In today's webinar, we will share what are exceptions to discharge, effects of Automatic Stay, secured Notice of Federal Tax Lien also known by its abbreviation NFTL, debts accrued during filing year, unfiled pre-petition returns, individual liability for corporate tax liability, plan feasibility, and technological advances.

At the beginning of every bankruptcy filing, the debtors that plan to file bankruptcy need to know the type of taxes, the reason for the tax assessments, tax assessment dates, and when the deadlines of the filing of these tax returns. It's very important debtors need to know and comply with pre-petition filing compliance with requirements. It is very important that the returns are filed by the deadline prior to filing bankruptcy plan that has an impact on taxes dischargeability in bankruptcy. The debtor usually receives a discharge of taxes. Now however, certain tax liabilities are exempt from discharge. We will identify five of the most common exceptions to discharge. The first one is trust fund taxes are not dischargeable. The trust fund taxes are employees Federal Tax Withholding, Social Security taxes, Medicare taxes that an employer withheld from their wage. The IRS conducts a Trust Fund Recovery Penalty investigation, also known by this abbreviation TFRP for the unpaid Trust Fund taxes to reimburse and compensate the government for the loss of employer failure to turn over these funds to the IRS. A second exception to discharge is taxes based on fraudulent returns are not dischargeable. You ask what is a fraudulent tax return? Well, a filing of a tax return that is a willful attempt to evade or defeat the tax. An example of a fraudulent tax return is when a return is filed with false information, such as inflated personal expenses or inflated business expense, false deduction, unallowed credit, or excess exemptions. Another exception to discharge are priority taxes, which we have four different subcategories of priority tax. The first category of priority tax is the liability that are not dischargeable in a three year rule, when tax debt is due within three years of a bankruptcy filing petition date. Our second sub-category is the two year rule. Tax liability is not dischargeable when an income tax return is filed within two years before bankruptcy petition date whereas to meet a dischargeable requirement, the income tax return must be filed by the taxpayer more than two years before the filing for bankruptcy, regardless of an extension filing or not. Moving on to the 240 day rule, the tax must be assessed at least 240 days prior to filing for bankruptcy, or exceptions to discharge. Our fourth subcategory on exceptions to discharge is the concept of tolling, which interprets the running of a statute of limitation in certain situations. Tolling can occur during statutory provision, providing for tolling or equitable tolling created by Supreme Court decision on the case of Young v. United States 535 USC subsection 43. In this case, the petitioner's tax return was due more than three years before their Chapter 7 filing, but less than three years before their Chapter 13 filing.

Holding that the look back period is tolled during the prior bankruptcy petitions of the Chapter 13 filing, the court concluded the 1992 debt had not been discharged when petitioners were granted a discharge under Chapter 7, which was filed after the Chapter 13 filing. In conclusion, the Supreme Court sided with the IRS that the 1992 income tax was due. A fourth common category for exception to discharge is taxes that are due on an unfiled tax return. There is filing prior to bankruptcy petition filing is important, as stated early. IRS estimates the tax liability on delinquent tax returns to include into the proof of claim. Now, when IRS is not properly notified of a bankruptcy or the IRS receives a late notice of a bankruptcy, this could affect the dischargeability of the bankruptcy. A timely bankruptcy filing notice to the service is very important for receiving a discharge at the end of the case. In some cases, penalties may be discharged while tax is not dischargeable. Oh no, you let, let's do our first poll question. Yvette Brooks-Williams: Sure thing, Alan. Audience, here's our first polling question. Which situation is not an exception to discharge? Is it, a, fraudulently filed return; 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? Now, take a moment, click on the radio button that best answers the question which situation is not an exception to discharge? So I'm going to give you a few more seconds to make your selection. Okay, we're going to stop the polling now. And let's share the correct answer on the next slide. And the correct response is D.

Correctly file Form 1040 received more than three years prior to the current bankruptcy petition date. Now, let's see how well you all did with this question. I see that 56% of you responded correctly. Maybe we might need a little clarification. Alan, can you provide a little more detail of why D is the correct answer? Alan Chu: Yes, Yvette. Well, the correct answer is D for the filing of the Form 1040 received more than three years prior to the backwards petition date. The answer is correct based on the three year priority tax rule, which the Form 1040 filing was prior to the three year priority rule as stated in the Exceptions to Discharge. Thank you, Yvette.

Yvette Brooks-Williams: Thank you. Thank you so much. I'm going to turn it back over to you to move on, Alan. Thank you. Alan Chu: All right, great. Let's discuss how bankruptcy filing impacts collection activity. An Automatic Stay is an injunction that arises by operation of the Bankruptcy Law, when a bankruptcy petition is filed under 11 USC subsection 362. When there is filed bankruptcy, the debtor usually wants an immediate relief from collection enforcement activities on all demands for payment. The Automatic Stay goes into effect on the same day of the bankruptcy petition filing. Now, there are some exempted situations in which IRS may pursue collection activity. The first one is post-petition and post confirmation tax liabilities are not covered by the Automatic Stay. So collection activity may be pursued. post-petition refers to taxes that are incurred after the filing of the bankruptcy petition. The Automatic Stay does not cover collection of taxes that are incurred in post-petition. Collection may be pursued if the bankruptcy plan is defaulted and if collection is not otherwise prohibited. Collection activity may continue when a motion to lift the Automatic Stay is filed and approved by the court. Such motion can be filed by any creditor, including the IRS. The IRS can pursue Exempt, Abandoned, or Excluded Property, also known by its abbreviation EAEP, to collect this chargeable liabilities in any bankruptcy chapter. Now for pre-petition, it is the time before the bankruptcy petition was filed. Pre-petition tax is incurred prior to the filing of bankruptcy petition. Income taxes are incurred on the last day of the income tax year. If the IRS bankruptcy specialist and/or bankruptcy advisors become aware of Automatic Stay violations, they will work on correcting the stay violation as soon as they learn about it. Debtors and authorized representative can contact the assigned bankruptcy specialist or bankruptcy advisor or the field's Centralized Insolvency to bring the Service's attention to a possible violation. Matter of fact, that brings me to a phone message I just received recently. A bankruptcy attorney paralegal left a voicemail for me to inform me that they believe the IRS went ahead and filed a Notice of Federal Tax Lien in post petition. We reviewed the case. I verified, indeed, that's what happened when the field collection revenue officer requested for a Notice of Federal Tax Lien filing on the debtor. The bankruptcy specialist immediately requested a withdrawal of Notice of Federal Tax Lien. Now, the bankruptcy specialists and advisors can also identify a potential violation doing case analysis and we will work on resolving it. Just like this example I provided. Continuing with effect of Automatic Stay, the Automatic Stay does not prevent IRS in performing tax assessment in some situations, as we will describe in the next few slides. IRS continues to conduct a Trust Fund Recovery Penalty investigation and tax assessment. Trust Fund Recovery Penalty assessed against individuals responsible for failure to turn over employment withholding and the IRS bankruptcy specialist prepares a government's proof of claim including any trust fund tax assessment or pending assessment, IRS can file un-assessed claim. Now while Automatic Stay is in effect, IRS examination can perform audits, but they cannot request audit assessment on the debtors account, unless debtor agree with the audit findings. IRS will send the proposed audit findings to the debtors in bankruptcy. The IRS cannot record the audit assessment because a debtor does not have appeal rights in bankruptcy. In bankruptcy proceeding, debtors can provide unfiled tax returns for filing compliance or provide tax returns to amend the previous filing. Debtors can make a remittance payment with the unfiled tax returns. The remittance payment is considered as a voluntary payment. During Automatic Stay is in effect, the IRS is permitted to make accurate related adjustments on debtors account based on tax returns filed by the debtor. Now, IRS also is permitted to make tax assessments for unfiled returns by default when the response to the IRS notice or the debtor agreed with the proposed tax assessment. This is known as a substitute for return process. If IRS accepted an Offer In Compromise prior to the bankruptcy petition filing date, date the IRS will honor the terms of this agreement in the bankruptcy plan. Now, however, if a new Offer In Compromise is submitted, it cannot be considered since the Offer In Compromise was submitted after the bankruptcy petition filing date. This is considered a post-petition submittal in Automatic Stay. Generally, bankruptcy procedures supersede an Offer In Compromise.

All right, in the next slide, we have some situation where Automatic Stay will not prevent IRS in performing. IRS will process an Innocent Spouse and/or an Injured Spouse claim as required through normal procedures and update the changes to reflect on to an amended proof of claim filed for bankruptcy case. When a debtor has an Installment Agreement in place, prior to bankruptcy petition filing date, the installment agreement will be suspended. Once the bankruptcy case is closed, the prior installment agreement will be reinstated with the same terms of the agreement without charging the debtor a reinstate fee, if the user fee was paid prior to bankruptcy filing petition date. The installment agreement could be terminated if additional tax liabilities were included in the bankruptcy. These additional taxes were not included in the installment agreement prior to filing bankruptcy. Hi, Yvette, how about another poll question? Yvette Brooks-Williams: I think that's an excellent idea, Alan. Audience, time for our next polling question. Which one of these 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 as done before, just take a moment and click the radio button that best answers the question, which one of these does an Automatic Stay prohibit? So I'm going to give you a few more seconds to make your selection. Okay, we're going to stop the polling now and let's share the correct answer on the next slide. Okay. And the correct response is B, recording of a Notice of Federal Tax Lien.

So let's see how well you all did with this question. All right, I see that 53% of you responded correctly. All right, Alan, I think we're going to need some more clarification. Can you provide a little more detail for it? Alan Chu: Yes, I'll be happy to. Well, the correct answer is, b, a Notice of Federal Tax Lien, also known by this abbreviation NFTL, recorded after the bankruptcy petition filings date, which is the post-petition date, is an a enforcement activity and a violation of the Automatic Stay. The IRS must act quickly to withdraw the Notice of Federal Tax Lien recording, as the example that I have provided earlier. Great, all right. Yvette Brooks-Williams: Thank you for the explanation. Yeah, I appreciate that explanation, Alan. So we're going to turn it back over to you again. Alan Chu: Okay. It is important to know if IRS recorded a pre-petition NFTL to determine if the IRS has a secure claim. A NFTL attaches to all real and personal property and the rights of the debtor under 11 USC subsection 506(a), the IRS has the secured claim when it has properly filed a pre-petition NFTL. It has a tax claim that is subject to setoff under 11 USC subsection 553. For purposes of determining the IRS's secured claim, the Notice of Federal Tax Lien or NFTL attaches to the debtor's property that became the estate property, including property exempted under 11 USC subsection 522(c)(2)(B). The Federal Tax Lien also attaches to property exempt from federal tax levy. In the case, United States versus Ron Pair Enterprises, Inc. 489 USC subsection 235, IRS is entitled to receive post-petition interest on allowed and over-secured claim. Now, one might wonder how does the IRS determine the value of an asset in a real property for a secured claim with NFTL recording? Well, the IRS caseworkers analyze the fair market value of the assets, what the encumbrances against the assets, and the priority of the IRS Notice of Federal Tax Lien recording date. Well, look, Yvette, I think it's a good time for us to have another poll question. Yvette Brooks-Williams: Okay, Alan. Here we are audience. Here's our third polling question. When can the IRS re-file a Notice of Federal Tax Lien during ongoing bankruptcy case? Is it a, tax liabilities listed on the original pre-petition Notice of Federal Tax Lien; b, this will be a stay violation; c, for post-petition liabilities; or d, when debtor moves to a new address? Now, take a moment and click on the radio button that best answers the question. When can the IRS re-file notice the federal tax lien during ongoing bankruptcy case? So, I'll give you a few seconds to make your selection. Okay, we're going to stop the polling now. And let's share the correct answer on the next slide. And the correct response is, a, tax liabilities listed on the original pre-petition Notice of Federal Tax Lien. So let's see how well you are a bit with this question. All right, I see that 34% of you responded correctly. So Alan, we're going to need some clarification and need you to provide more detail. So, let's see if we can help the audience understand what you've just gone for. Alan Chu: Well, it's my pleasure to provide a response to this answer. The correct answer is A. We re-filing a Notice of Federal Tax Lien by itself is not considered a violation of Automatic Stay under 11 USC subsection 362 because the Notice of Federal Tax Lien is not being created, rather the Notice of Federal Tax Lien is being preserved, since the Notice of Federal Tax Lien was filed prior to the bankruptcy filing date. The tax period on the Notice of Federal Tax Lien must be made the same on the re-file as the original Notice of Federal Tax Lien filing prior to the bankruptcy filing period date. So, for instance, if the Notice of Federal Tax Lien in pre-petition was filed for the 10/4/2016 and 2017 tax year, the IRS can re-file a Lien to preserve its place for 2016 and 2017 but if during bankruptcy the debtor includes 2020 taxes, okay, that is post-petition liability. The IRS cannot re-file that Lien for the 2020 tax return. Hope that provides a better explanation for our audience. Yvette Brooks-Williams: Yeah, thank you for the explanation. So I just want to clarify. So the reason that b was not correct is because recording a Notice of Federal Tax Lien after the bankruptcy petition filing date is a violation of the Automatic Stay. Is that correct? Alan Chu: Yes, that's correct, Yvette. Yvette Brooks-Williams: Okay, and let me just clarify for c, the Notice of Federal Tax Lien filing on a post-petition tax liability is an Automatic Stay violation and that the term post-petition refers to after the bankruptcy petition filing date. Alan Chu: Yes, that's correct. A post-petition tax liability is a violation of Automatic Stay for filing a new NFTL. Yvette Brooks-Williams: And one last thing, the IRS cannot update the new address on a Notice of Federal Tax Lien recording. Is that true? Alan Chu: That is correct. Yes, the Notice of Federal Tax Lien filed prior to bankruptcy already have a address on there. If the debtor moves to new address, we cannot file a new NFTL with that new address. It must be the same address prior to bankruptcy petition. Yvette Brooks-Williams: Okay, thanks, Alan. Yeah, thanks for explaining. I hope that really helps our audience. It looks like we're going to turn it over to Anthony next to discuss the next topic. Anthony, I'm going to turn this virtual floor over to you. Anthony Liburd: Thanks for that. So before I get started, I'd like to first thank everyone for your attendance today.

Now the next topic that we discussed will be debt accrued during the filing year. Now, depending on the date of your bankruptcy filing, a situation that may come up in the beginning of the taxpayer case is that an individual can terminate the tax year. Now, I'm talking about an individual debtor in a Chapter 7 or a Chapter 11 case that may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed and that is as of the day before the date of the bankruptcy case. Although this is not a common practice, individuals may elect to terminate their tax year when the bankruptcy petition is filed. Now if the election is made, the tax year is terminated as of the day before the bankruptcy filing, which will result in the debtors filing two short year returns. Now this election is made by filing the first short year return on or before the due date, which is the 15th day of the fourth month, following the close of the first short year. If the election is made, the debtor's federal income tax liability for the first short year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Also, the tax liability for the first short year isn't subject to discharge under the bankruptcy code. Now the debtor must write at the top of the first short year return SECTION 1398 ELECTION and at the top of that second year, return the debtor must write SECOND YEAR SHORT YEAR RETURN AFTER SECTION 1398 ELECTION. Now, I'm making note here that the election can also be made by filing an extension to file on or before the due date of this return. Now let's talk about the corporate debtors' pre-petition and post-petition tax liability. So corporate debtors usually run into situations where the taxpayer has filed bankruptcy petition in the middle of a tax period. Now for debtors who owe employment taxes and file bankruptcy during the quarter, the employment taxes are attributable to wages earned prepetition, it should be included on a proof of claim as a pre-petition priority tax. Now for bankruptcy purposes, an employer's liability for employment taxes accrues when the wages in question are earned. Now, the amount may need to be estimated until the employment tax return is actually filed. So you might find out that IRS proof of claim shows estimate. Now, when it comes to something like this, you will just work with the bankruptcy specialist assigned to your case and something that you may see that we see that sometimes seems to be a problem deals with, of course, those administrative post-petition or 1305 claims by the post-petition liability, where the taxpayer is not using the bankruptcy as a fresh start, but as another pattern of additional tax liability. Now, if the debtor does not bring that filing compliance current, then the IRS may proceed with the objection for plan confirmation, and possibly also seek case dismissal on the grounds for non-compliance. Now, I have a couple of notes for you. Now, when you're talking about current and post-petition compliance and why it's important and if the debtor wish to remain in a bankruptcy, the debtor, of course, cannot, I repeat cannot, continue to accrue tax liabilities once they've filed a bankruptcy. And also, when we're talking about the debtor, the debtor cannot make a short year election if there is no assets other than exempt property that are in the bankruptcy estate. Now the next topic I'd like to discuss is those unfiled pre-petition returns. Now so we all know, of course, the Chapter 13 debtors are all required to file those returns for tax periods in their four year period ending an on the petition date. Now, these returns maybe individual tax returns or employment taxes for sole proprietorships. So, in the beginning of your client's case, it's very important to determine if the taxpayer was in compliance pre-petition filing. As one of those indicators you'll see is that the IRS will actually file that proof of claim prior to their first meeting of creditors or the 341 meeting, and you will see those listed as estimated liabilities with no assessment date next to those amounts.

Now, it's important for the debtors, of course, to file those missing returns for the trustee to of course to recommend that plan confirmation. Now, those estimated liabilities may, of course, also impact the plan feasibility. So the bankruptcy specialist of course, working your case will address those pre-petition compliance at the first meeting of creditors or the 341 or also by issuing a Letter 1714 notice of unfiled returns. Now, as the attorney of record, you will also receive a copy of this Letter 1714 that's issued to the debtor requesting those delinquent returns to be filed and that letter will provide the list of missing returns. It will also provide the type of returns, what years are missing, and/or if there is any quarter that is missing. Now, these delinquent returns should be mailed or sent to the assigned bankruptcy specialists whose name and email address are listed on the IRS proof of claim. Now, of course, makes sure when those returns are sent, they must be signed and dated and, of course, they must be accurate. Then, of course now, once we receive those returns, the IRS will amend a proof of claim once those delinquent returns are assessed or if the debtor provides credible information explaining why the debtor was not liable to file a delinquent return. Now case we're talking about communication with insolvency and responding to those letters, it's very important to prevent further litigation, or, of course, the IRS may proceed with filing those returns under IRSC 6020(b). Now, if the debtor does not bring filing compliance current, IRS may also proceed with the objection to plan confirmation, or possibly also seek a case dismissal on the grounds for non-compliance. Now, later in this presentation, I will also provide you a new secure IRS tool that will help you to send those requested information to your assigned bankruptcy specialist. Now, all the information I just discussed, of course, about unfiled returns can also be verified if the debtor or you as the attorney of record, reviewed a debtors' IRS account transcript. Now, if the debtors need to know of course the amounts of liabilities prior to the IRS proof of claim being filed, the debtors and the attorneys may find tax transcripts helpful Also, we could provide information regarding discharge determination and information for in determining the amount of unpaid liabilities and also verification if returns have been filed. resolving other issues. Now, the tax transcripts will also indicate if the IRS has a Notice of Federal Tax Lien that was previously filed. You do also have a few options on how copies of those transcripts can be received. First is online or second is by mail. So let's talk about the first option. We're talking about online that can be requested by going to IRS.gov/individuals/get-transcript. Now, your second option is to get those tax returns and tax account transcripts which are going to be limited to the current and prior three years when using that Get Transcripts by mail or if you need older tax account, you would have to submit a Form 4506-T. Also, their next best option is that the debtor and the attorney can call 800-908-9946.

And I'll give you that number again, it's 800-908-9946. Now, we also have the Transcript Delivery System or TDS system. And the IRS, of course, has changed the format and distribution policy for those tax transcripts and the authorized tax practitioners can access the Transcript Delivery System or request client transcripts be sent to the e-services mailbox, now, where they will be available, of course for retrieval but I just want to give you a quick reminder that if you view those transcripts in that e-services mailbox, it will only be available for three days. Now if you received the transcripts, but you have not viewed them, they will be available for 30 days and of course those transcripts provide the best information and is located at IRS.gov and you can search for Transcripts. Now of course, let's talk about the e-services. The e-services is a suite of web-based tools that allow tax professionals or reporting agents or mortgage industry payers and others to complete transactions online with the IRS. Now all e-services users must accept the user agreement in order to access the account. So for online Power of Attorneys and Tax information Authorization, you would use of course a Tax Pro Account or you would Submit a Form 2848, which is a power of attorney and declaration of representative or Form 8821, which is for Tax Information Authorization. Now upon your successful registration, you will have the option to continue and get the transcripts online. Now it will ask you the reason for that you need transcripts to determine which type may be best for you. Now on the Get Transcripts online, it will provide access to all transcript type and years available for you to view, print or download from our browser. And just a special note here, you can get transcripts by mail and it's also available in Spanish. So if you get it by mail, it can be in Spanish. However, we have translated the Get Transcript webpage into five foreign languages to help users before they try to verify their identity and get the transcripts online, which is available only in English. I'll just say that again, you can get in mail, it's available in Spanish, but it's only available in English after you verify your identity. Now, in the course of preparation, of course, you may find out that your Trust Fund Recovery Penalty was assessed against your client or there's currently an investigation for your client. Now Trust Fund taxes are taxes required to be withheld or collected by a third party, usually employer, and paid over to the government and that Trust Fund Recovery Penalty allows the IRS to assess against those responsible parties when the trust fund taxes are not paid over to the government. Now the party assessed the Trust Fund Recovery Penalty and of course their duty and authority and the status to direct collection and made a decision to not pay over that account for the tax. Now the penalty facilitates the collection of trust fund taxes and enhances, of course, voluntary compliance. Now most Trust Fund Recovery Penalties relate to employment taxes due from businesses and those are usually based on Form 941, Form 943, Form 944, or Form 945, or it can be a Form 1042 or a CT-1. We also do have miscellaneous excise taxes that are considered Trust Fund taxes and are reported on Form 720.

Now the Trust Fund Recovery Penalties is assessed and collected in the same manner as tax. So it's a one-time collection. Withheld income and employment taxes are collected, of course, as excise taxes, but they are only collected once. Now whether it's from the business and/or from one or more of its responsible parties, the proof of claim will state that. Of course, if there's pre-petition Trust Fund quarters and in any trust fund recovery penalty accruing on tax periods ending before the bankruptcy petition is filed, it constitutes a pre-petition tax liability, even if the trust fund recovery penalty assessment was not made before the bankruptcy was filed. Now preparation of that claim, the government proof of claim, will include the full amount of any Trust Fund tax pending. If an as accurate amount is not known at the time of the proof of claim is prepared, the case worker can file it un-assessed estimated claim and of course amended once the Trust Fund taxes has been set. Now Trust Fund recovery penalty is an important taxes individual who's responsible again for business Trust Fund taxes that were paid and who willfully failed to do so. Trust Fund Recovery Penalty tax liabilities are not dischargeable in all individual bankruptcy cases, even if the IRS does not file a claim for those liabilities. So, if a potentially responsible person has filed bankruptcy and a Trust Fund Recovery Penalty has not yet been assessed, and an investigation is pending, the field insolvency case workers should be notified so that the liability can be included on the proof of claim prior to the bar date or by confirmation date. If necessary, of course, insolvency workers should be provided with an accurate an estimate as possible of that Trust Fund Recovery Penalty, so it can be included in a timely proof of claim. An amended IRS proof of claim will be prepared later when those exact amount assessments are made. Next I'd like to discuss plan feasibility and some of the things that will prompt an IRS objection to confirmation. Now we're talking about when a case worker has analyzed the case and the case fails to meet the requirements, for example, the priority and secured claims will not be paid in full, it is not feasible given a debtors current income, expenses, and future tax obligations, as proposes to a bank balloon payment, it discriminates against the IRS by treating the service claims differently and other creditors in the same classification or it proposes payments outside the plan with an exception for cases with, of course, restitution assessment. Also, it could contain language discharging liabilities that are non-dischargeable part of the bankruptcy code or it contains language that would require the release of lien or non-dischargeable liability, or that would require you to release of lien from property that was excluded from the bankruptcy estate.

Now the next topic we discuss, of course, will be resolving issues with the IRS. Now I want to encourage debtors and their attorneys representative to contact your bankruptcy specialists or the centralized insolvency to address issues or questions that the debtors or attorney may have.

Now a lot of situations can be resolved without litigation by contacting the assigned bankruptcy specialist who will advise on how to proceed in order to resolve those issues. So for example, let's say your client has unfiled returns, so the IRS proof of claim shows estimate. This issue can be resolved by calling the bankruptcy specialist instead of filing a objection to the proof of claim and of course there are a couple of ways to find that specialist information. Now the first of course is to contact the bankruptcy specialist assigned to your case, you can find that specialist name at the bottom of the IRS proof of claim. Now, your second option, of course, then it will be to contact the centralized insolvency operations and they can be contacted at 800-973-0424, if a proof of claim has not yet been filed. So just as a wrap up this slide, your best resource resolving questions about the IRS proof of claim and other issues such as unfiled returns, plan payment, refunds, estimated liabilities, is to contact the assigned bankruptcy specialist. And just to note that, due to how cases are assigned, your bankruptcy specialist may not be located in your local area often. And depending on older cases, that bankruptcy specialist could have retired. So if the name is no longer valid on the proof of claim, your best option is still to contact in centralized insolvency operations at 800-973-0424. Now, before I provide information about proper bankruptcy notifications for the IRS, I want to share the IRS insolvency composition where the insolvency unit that handles bankruptcy cases, of course, composition includes two parts. Insolvency consists of a field operation and that part the field operation has offices geographically distributed throughout the United States throughout the nation. Now when we talk about centralized insolvency operations that is located in Philadelphia, and those bankruptcy specialists in the CIO are notified of the bankruptcy filing, they process certain payments from trustees, and they handle phone calls from our 800 number, which again is 800-973-0424. Now the specialist from CIO and field insolvency, do continuously communicate with one another in order to resolve cases related to issues and, of course, to case processing. Now, next, you know how insolvency is composed and there are multiple offices, it's very important to remember how to notify the IRS of a bankruptcy filing. So the correct way to notify the IRS of a bankruptcy filing or provide a notice regarding any other ongoing case action is to mail document to the address you see on the slide and those notifications must be mailed to the Philadelphia CIO office at the address Internal Revenue Service, PO Box 7346, Philadelphia, PA 19101-7346. We also like to ask that you please provide and verify that your legal services you may use for noticing is also provided the address I just provided. The reason I bring this up is due to recent issues of notices being sent to specific bankruptcy specialists. Now the reason that is very important is of course that we notify the correct office is because CIO ensures by starting a process that freezes inputs on those tax accounts when notification of the bankruptcy filing is received. So because the sooner the IRS is notified properly, the faster the bankruptcy specialist can ensure that collection has stopped, if appropriate. And I believe we now have time for a polling question, right, Yvette. Yvette Brooks-Williams: We sure do. Audience, it is time for the fourth polling question. What is the correct address to mail bankruptcy notifications to the Internal Revenue Service? It is a, IRS P.O. Box 7346 in Philadelphia; b, IRS Mail Room 1111 Constitution Avenue in Washington, DC; c, IRS Insolvency in Oakland, California; or d, you can just mail it to any IRS office. So, take a moment, click the radio button that best answers the question, what is the correct address to mail bankruptcy notification to the Internal Revenue Service? So, I will give you a few more seconds to make your selection. Okay, we are going to stop the polling now and let's share the correct answer on the next slide. And the correct response is, a ,IRSC, PO Box 7346, Philadelphia. Now let's see how well you all did with this question. All right, I see that give me one second. Sorry, trying to calculate your awesome response, I see that 90% of you responded correctly. Great job. Anthony, so far, so good, So let's turn it back over to you.

Anthony Liburd: Thank you. Then I see that you were paying attention to where to properly sent, and I appreciate that. Now, of course, the next topic I want to discuss will be Electronic Federal Tax Payment System or, of course, we have an acronym EFTPS for trustee payments. So what this system is? It's for individual, businesses and trustees that can electronically deposit and pay those federal taxes using the Electronic Federal Tax Payment System. Now, there's a few steps you will need to complete before you can make those payments using EFTPS. Now, for a Chapter 13 Trustee, you must submit completed Form 14781 Electronic Federal Tax Payment System - Insolvency Registration PDF. You will then receive your EFTPS registration number and then you would need to work with your software provider and bank to set up the electronic funds transfer for making those EFTPS claim payments via ACH. Now, if you're a new business that indicated a likely federal tax deposit liability when you applied for your EIN, you are pre-enrolled. Now you should have received the letter with your four digit EFTPS PIN but if you didn't, you can call 800-555-4477 and when you call that number, you will give the agent your EIN and then he or she can provide your PIN. Now this is the only situation in which PINs are given over the phone and it's only because you haven't yet added your banking information to your enrollment. Now of course they activate your enrollment, so you can make those payments using this service. You will have to call 800-555-3453, you will be asked to enter your EIN, your PIN, your banking information, and a contact phone number. You receive your 18 digit enrollment number, which can be used in creating your internet password. Now as soon as you finish your call successfully, you can begin scheduling those payments. Now if you want to make payments as an individual taxpayer or for a business that wasn't pre-enrolled, you would then need to click on enrollment and follow the instruction. So in five to seven days after you submit that enrollment, you will receive your pin and enrollment number via the US Mail. Now if you need to schedule a payment before you receive your pin, you can call 805-555-4477, two business days after completing your enrollment, and if the information you provide match the IRS records, an agent can then take your payment. Now for security reasons, the agent will not be able to give you the PIN over the phone. Now of course I want to provide what are those benefits of using the EFTPS system. Now you can submit those claim payments securely. You can use eftps.gov 24/7 and it eliminates printing and mailing costs of paper payment and you'll receive, of course, that immediate confirmation of payment. You also have access to 60 months of payment history, and you can schedule payments in advance. Now next, I'd like to introduce you to a new secure tool that the IRS has implemented to better assist with taxpayers and attorneys providing required documentations requested by a bankruptcy specialist working your case. Now, the new tool goes by the acronym DUT or the Document Upload Tool. Now this is a new tool that's part of the IRS technology advancement to provide taxpayers and attorneys with quality service and the right to confidentiality. Now, the first step to use the DUT will require that the bankruptcy specialists working your case to secure and provide the taxpayers or their representative with a unique code and it's a one-time use code that of course is going to only be valid for 70 days. You will also get with that code a corresponding link to IRS.gov/sendmyreply to upload the required document.

So here is how the steps would process or would work. So let's say the bankruptcy specialist working your case has requested some document, or let's say the taxpayer or the attorney has some documents they would like to provide to the IRS. Now the bankruptcy specialist will request the form DUT a unique code and, of course, as a reminder, that code is only valid for 70 days, then the taxpayer or your attorney will then use that link at www.IRS.gov/sendmyreply to upload the required document. Now you will have a couple of privacy statement questions to answer, then you will be asked for that unique code. Once you enter that code and continue with the process of uploading the document, you will be providing to the IRS. I do want to provide a note, of course, that you remember, there is a limitation but that unique code is only valid for 70 days and also when you are uploading or you can upload scanned photos or digital copies in the form of jpg, png or pdf. Now it is with a maximum file size of 15 megabytes per file up to 40 files and it provides 120 page limit per file. This can of course be done from your phone or on a computer.

Now all those required documents must be uploaded before you press the submit button. But don't worry, if that doesn't happen, it will just require that the taxpayer or the attorney needs to then contact their bankruptcy specialist caseworker to request a new unique code. So one thing I just want to make a note is that on this unique code is that if you have documents that's going to be over 120 pages, then you would submit the 120 pages in the first unique code and then request that second code from the specialist and then you can submit the rest of your document.

Now I believe it's time for another poll question right, Yvette? Yvette Brooks-Williams: Yes, it is Anthony. Audience, it's time for our last polling question. I can hardly believe it. DUT is used to transmit the following, with the exception of, a, financial documents; b, Proof of Federal Tax Deposit or Estimated Payment; c, signed original and copies of tax returns; or d, notice of bankruptcy filing to the Internal Revenue Service. So let's take a moment and click the radio buttons that best answers the question, DUT is used to transmit all the following, except.

So, while you're thinking about that, I'll give you a few more seconds to make your selection.

Okay, we're going to stop the polling now and let's share the correct answer on the next slide.

And the correct response is d, notice of bankruptcy filing to the Internal Revenue Service. So let's see how well you all did with this question. Then I see that 47% of you responded correctly. So maybe we need a little clarification, Anthony. Can you provide a little more detail for us? Anthony Liburd: Sure, not a problem. Now, on this question, we're talking about DUT, the new tool, right, and we're talking about what it's used to be to transmit. And I know the answer shows, Notice of Federal Tax Lien and that's the exception, right. So I just want you to remember earlier in your presentation, I provided a Philadelphia address for where you would send those notices of bankruptcy filing. So with the DUT or Document Upload Tool, remember, you're uploading documents such as you can upload the financial document, or proof of tax deposit, or those original signed returns or copies of tax returns, you can upload that to the specialists that requested it. But when we're talking about the notice, your initial notice of that bankruptcy filing, remember, it needs to go to CIO or the Philadelphia office that I provided the address earlier. So, Yvette, that I hope that explains it a little bit more. Thank you. Yvette Brooks-Williams: Yeah, that was a great explanation and thank you for that clarification.

Audience, I hope that helped you because it really helped me. Sabina, let me hand that off to you now. Let's see what you have to say to our audience. Sabina Makarov: Thank you, Yvette. So before we conclude this webinar, I want to provide you with the following IRS resources that are always available in multiple languages. The resources can be found at IRS.gov, search using keywords bankruptcy, will provide you access to 208 items right at your fingertips. So now remember that information is general and it may not cover your case-specific question, but some useful information to start with will be included in the search. Another resource is publication 908, Bankruptcy Tax Guide, which was just revised in February of this year. It explains the basic federal income tax aspects in bankruptcies such as the Bankruptcy Court requires Chapter 13 debtors to file all required returns for five years ending within four years of the debtors bankruptcy filing, or as requested. All five federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. For the debtor, filing bankruptcy under all chapters, which are Chapter 7, 11, 12, and 13, the Bankruptcy Court provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, the taxing authority may request that the Bankruptcy Court either dismisses the case or converts the case to a chapter under the Bankruptcy Court under another chapter to another chapter. If the debtor does not file the required return within 90 days after the request is made, the Bankruptcy Court must dismiss or convert the case. Publication 908 will provide guidance about tax returns and payments of taxes in Chapter 11. The Bankruptcy Court provides that a Chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the order for the relief or bankruptcy petition date in voluntary basis is a cause for dismissal of the Chapter 11 case, conversion to Chapter 7 case or appointment of a Chapter 11 trustee.

Failure to timely file the returns and present confirmation of a Chapter 13 plan and results in either dismissal of Chapter 13 case or conversion to a Chapter 7. IRS offers another publication, Publication 5082, What You Should Know about Chapter 13 Bankruptcy and Taxes, which was revised in September of 2022. This publication provides answers to common questions about Chapter 13 bankruptcy. So this is also some basic information that you should consider providing to your clients who are filing Chapter 13 cases. And last but not least resource is the Internal Revenue Manual, Part 5.9. And now I hope that we have some questions. Yvette I'm turning it back over to you. Yvette Brooks-Williams: Thank you, Sabina. Hello again, it's me, Yvette Brooks-Williams and I will be moderating the Q&;A session. But before we start the Q&;A session, I do want to thank everyone for attending today's presentations, Bankruptcy and the Internal Revenue Service. Now earlier, I mentioned that we want to know what questions you have for our presenters, so here's your opportunity. Now, if you haven't input your questions, there's still time so go ahead and click on the drop down arrow next to the ask question field, type in your question and click send. Now today, we have the pleasure of being joined by Subject Matter Experts, Kim Wheelock and Jerome Turner, who are on with us to answer your question. And one thing before we start, we may not have time to answer all of the questions submitted, but we will answer as many as time allows, so let's get started so we can get to as many of your questions as possible. Jerome, the first question is going to be for you. What are the exceptions to the Automatic stay? Jerome Turner: Hi, Yvette. Thank you so much. That's a great question.

Now generally, Federal law prohibits the IRS from pursuing collection for liabilities covered by the bankruptcy. Now there are exceptions in which the IRS may pursue collection on tax liabilities and that would consist of post-petition and post confirmation liabilities that are not covered by the Automatic Stay, or upon plan default, if not otherwise prohibited when instances when a motion to lift the Automatic Stay is filed and approved. Yvette Brooks-Williams: Thank you so much, Jerome. Kim, I shoot it over to you. Does bankruptcy eliminate debt owed to the Internal Revenue Service? Kim Wheelock: Thank you, Yvette. Hi, this is Kim Wheelock. And eliminating debt owed to the IRS is evaluated on a case by case basis. Some debts are non-dischargeable under Bankruptcy Code and will remain on the account even after the discharge.

Some examples of these non-dischargeable debts are Trust Fund taxes, taxes based on fraudulent returns, or a willful attempt to evade or defeat tax, unfiled tax return, taxes due on returns filed late and within two years before the petition date. So, discharge may be granted to individuals in Chapter 7, 11, 12, or 13, and discharge may also be granted to corporations, partnerships, and LLCs that reorganize in a Chapter 11 or 12. Discharges are not granted to corporation, partnership and LLC that file a Chapter 7 bankruptcies, discharges are also not granted in a liquidating Chapter 11 case. It is important to note that if only one person file for bankruptcy who is married and has a married filing joint tax returns with tax liabilities, the non-petitioning spouse will still owe any unpaid portion of the liability. The exception to this is in community property states and those states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Puerto Rico, and Alaska also has the option to elect community property. Yvette Brooks-Williams: Thank you, Kim. Jerome, so what are the tax compliance requirements under Chapter 13? Jerome Turner: Now the tax compliance requirements under Chapter 13, the Bankruptcy Code requires Chapter 13 debtors to file all required tax returns for taxpayers ending within four years of the debtors' bankruptcy petition. All such federal tax returns must be filed with the IRS before the initial date set for the first meeting of creditors and that's also known as the 341 Meeting. The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file those tax returns. After notice and hearing, the bankruptcy court may extend the period for another 30 days. Failure to timely file the returns can prevent confirmation of a Chapter 13 plan and result in either dismissal of the Chapter 13 case or conversion to a Chapter 7 case. Yvette Brooks-Williams: Oh, sorry, I was talking to a mute. I was looking at all these questions and getting so excited. Kim, the audience has asked some really great questions, so I was just reading through. If a taxpayer is in Chapter 13 bankruptcy and filed a current year return for a refund, will it be offset or will it be released? Kim Wheelock: That is actually an excellent question. And I have an answer to that. The IRS does have the right to offset pre-petition refunds towards pre-petition tax liabilities. If the refund period is a post-petition period, the refund will be released so long as the debtor has no other post-petition liabilities. However, the refund may still be subject to offset to other non-IRS debt such as state taxes or child support just to name a couple. Yvette Brooks-Williams: Okay. Jerome, yeah, they picked this one especially for you. What are the tax responsibilities after the bankruptcy filing, including post-petition filing requirements? And Jerome, before you answer, could you just give a quick definition on what post-petition is because I saw some of that in our questions, in our conversations. Jerome Turner: So once the bankruptcy filing has been submitted to the Bankruptcy Codes, we look at that at the petition date. So anything that occurs after that initial bankruptcy filing would be considered post-petition. So that's a great intro to this, so to kind of just a review what the question was, what are the tax responsibilities after the bankruptcy filing including post petition filing requirements, so for debtors filing bankruptcy, under all chapters, which include 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 obtain an extension for filing the return before the due date, the IRS or trustee may request that the Bankruptcy Code either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the Bankruptcy Code must dismiss or convert the case.

All post-petition tax debt should be paid on the due date of the return prior to any extension.

Tax returns and payments of taxes in Chapter 11 cases, the Bankruptcy Code provides that a chapter 11 debtors failure to timely file tax returns and pay taxes owed after the date of the bankruptcy petition is cause for dismissal of the Chapter 11 case or conversion to a Chapter 7 case or an appointment of a Chapter 11 Trustee. Yvette Brooks-Williams: Thank you for such a great explanation of that. Kim, let's see what question can I find. This is a good one for you, Kim. Does filing a bankruptcy terminate an active installment agreement? Kim Wheelock: That is a good one. An installment agreement is considered to be suspended by a taxpayer filing for bankruptcy or bankruptcy filing, but it's not terminated. 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. It is important to note though a termination of an installment agreement while a taxpayer is in bankruptcy could be viewed as an act to collect the underlying tax liabilities, therefore a violation of the Bankruptcy Automatic Stay. Upon completion of the bankruptcy, the IRS would look to reinstate the installment agreement on any pre-petition non-dischargeable debt. If the taxpayer has incurred any post-petition tax liabilities, the installment agreement cannot be reinstated and the purpose for that is before filing for bankruptcy, there were certain tax liabilities included in that installment agreement and those post-petition they were not included in there, and therefore it cannot automatically be reinstated, they would need to have a new installment agreement. Yvette Brooks-Williams: Thank you for the additional explanation. That was helpful. Jerome, back to you. Let's see. Well, I think this might be a good one. What are bankruptcy estate tax return filing requirements? Jerome Turner: And I'm glad you asked that one because I saw a couple of those come up in the question and answer in the chat. So the filing threshold if the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or the debtor in possession must file an income tax return on Form 1040. Now this amount is equal to the basic standard deduction for married filing individually, who's filing separately. The accounting period for the bankruptcy estate may have a fiscal year, however, the period cannot be longer than 12 months.

For 2022, the threshold file amount for a bankruptcy estate is $12,950 and again, this amount is equal to that $12,950 standard deduction for married individuals filing separately. And again, this amount is usually generally adjusted annually. Yvette Brooks-Williams: Perfect. Kim let me just say audience, you guys have some amazing questions. These are great. Kim, what happens if the IRS does not receive notice or receive a late notice of bankruptcy filing? What happens in that case? Kim Wheelock: Yeah, I've actually seen this question. So, under Bankruptcy Code 523, it actually 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 schedules and statements. Please keep in mind, though, this provision does not apply if the creditor otherwise has 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 a chapter no-asset case, as a proof of claim is not filed for this type of case. Yvette Brooks-Williams: Thank you, Kim. Okay, Jerome, let's go back over to you with, what are the effects of a Notice of Federal Tax Lien with regard to bankruptcy filing? Jerome Turner: Thank you, Yvette. And then I saw that pop up a few times in the chat box. So under 11 USC subsection 506(a), the IRS has a secure claim when a pre-petition Notice of Federal Tax Lien is properly filed and there's equity in the debtors property to which a lien attached or has a tax claim that is subject to setoff under 11 USC subsection 553. The allowed amount of a secured claim will be determined after evaluation of the equity in the property. This valuation would be based on the debtors property that became the estate and the commencement of the bankruptcy case for the bankruptcy filing petition date, including property exempted under 11 USC subsection 522. Filing a claim is not required in bankruptcy to preserve a lien on the debtor's pre-petition assets that are not sold and distributed during the bankruptcy case. A discharge will prevent a creditor from enforcing a dischargeable debt against the debtor personally. The IRS may enforce its lien for dischargeable taxes against the debtor's exempt property if that Notice of Federal Tax Lien was filed before the bankruptcy petition was filed. Yvette Brooks-Williams: Thank you, Jerome.

Kim, would you be able to explain the difference between a business that filed a Chapter 11 versus a business that filed a Chapter 7 because it seems like it has been in most of these questions? Kim Wheelock: I certainly can explain the differences. It would be difficult to list all of the differences between the Chapter 11 versus the Chapter 7 and given the time restraints, I'm not going to attempt to do that here on this forum. But one of the most obvious differences is that most businesses like a Chapter 11 bankruptcy, they filed to reorganize their business while they repay their creditors under a plan of reorganization. They may also file to liquidate their business as a debtor in possession instead of liquidating in a Chapter 7 with the court appointed trustee. In the case of a Chapter 7, the business ceases to operate and that's under bankruptcy 11 USC subsection 721, it authorizes the 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 orderly liquidation of the estate. The trustee will then pay the creditors through the liquidation and distribution of the debtor's assets. Yvette Brooks-Williams: Great explanation, thank you. Jerome, what happens to the pre-petition tax liability if the debtor defaults on payments under the Chapter 11 bankruptcy plan? Jerome Turner: So when the debtor is non-compliant with the terms of a confirmed plan, the assigned bankruptcy specialists will review the plan for default provisions. If there are no plan default provisions, the bankruptcy specialist will attempt to phone contact the debtor in possession to negotiate a cure for the default and try to work out repayment. If an agreement cannot be reached during this phone contact, the debtor in possession will be given a deadline to become current and in full compliance. A letter of default will be issued providing the payment deadline, as well as the consequences if the payment is not received. If there are default provisions in the plan, the bankruptcy specialist will comply with those provisions. The provisions may require a default letter be sent to both the debtor in possession and/or the debtor and possession's attorney. The letter will include a deadline to cure the late payment as well as consequences if the payment is not received becoming into compliance. Now, if the default is not cured by the date requested, the IRS has the option to proceed with administrative collection and/or filing the motion to convert or dismiss the Chapter 11 bankruptcy case. Yvette Brooks-Williams: Okay, thanks, Jerome. Kim, let me come back to you with what are some examples if he could provide some of when the IRS may file an objection to the Chapter 13 plan? Kim Wheelock: Sure, there are many examples that I could provide. I'll give you just a few. If the plan fails to meet the requirements of 11 USC bankruptcy subsection 1322 and 1325, for example, the priority and secure claims on the proof of claim will not be paid in full through that plan.

Another example is if the plan proposes a balloon payment, then the IRS may object to that. If the plan discriminates against the IRS by treating the Service's claim differently than other creditors in the same classification that would certainly warrant an objection by the IRS; or if the plan is modified by the debtor after the confirmation if such a modification could impair the government's claim; if the plan contains language requesting avoidance of the liens securing taxes that may be another reason why we may object. As I mentioned, these are just a few examples of them when the IRS may object to a Chapter 13 plan, but there are many reasons we may do so.

Yvette Brooks-Williams: Okay, great question and equally great response. Jerome, let me come back to you. What happens is there are post-petition tax liabilities after the plan has been confirmed? Jerome Turner: That's another great question. Taxes incurred after the date of the bankruptcy following are considered to be post-petition tax liabilities. Post-petition tax liabilities are handled in various ways by IRS throughout the country. There are various approaches when dealing with post-petition tax liabilities, including filing 11 USC 1305 claim that that would be a claim file based on those post-petition liabilities, sending a request to a collection revenue officer for an investigation and possible collection actions, which could lead to a motion to lift the Automatic Stay as warranted, filing the motion to lift the Automatic Stay for a possible refund offset, or filing a motion to convert or dismiss the case. The debtor will not qualify for an installment agreement on post-petition liability during the bankruptcy proceedings. Yvette Brooks-Williams: Okay. So Jerome and Kim, we've been kind of playing tennis back and forth. So this time, I'm just going to throw the ball up in the air and one of you needs to catch it, okay. The question we have is what is an Automatic Stay and I feel like we covered it, but there needs to be more clarification because the question is being asked again. So what's an Automatic Stay? Kim Wheelock: Right, we did discuss it a little bit. This is Kim and I'll take the question. But I don't know that if it was actually explained. The filing of the bankruptcy petition, under any chapter acts as an injunction or a legal prohibition of further action against the estate, debtor, or property of the debtor. This injunction is called the Automatic Stay. So that is a basic explanation of the Automatic Stay. Yvette Brooks-Williams: Thank you. All right, the ball is up again. Is the trust fund assessed during the Automatic Stay?

Jerome Turner: And that's another good question. So, with the Bankruptcy Reform Act of 1994, under B.R.A '94, that brought a lot of significant changes that affected the IRS, and then also included the ability for the Automatic Stay to allow for assessment of trust on recovery penalties and that's based on deficiencies and that applies that no longer apply under 11 USC 362(b)(9). So deficiencies in which a statutory period for petitioning the tax court has expired prior to the bankruptcy petition can also be assessed. So, long story short, the trust fund can proceed with assessment. If there is funding in the plan, it would be beneficial for the bankruptcy to allow for that assessment to be included in there, so that the IRS can include that on their proof of claim, along with the fact that the Trust Fund tax liabilities are non- dischargeable. Yvette Brooks-Williams: Okay, thanks, Jerome. Let me see here. Going back to the questions. Here's one, can you file an offer and compromise while you are in bankruptcy? Who wants to take that one? Jerome Turner: I can go ahead and take that one. So you can't have an offer and compromise while you're in bankruptcy. The offer and compromise unit would contact the bankruptcy unit to verify that there is a current bankruptcy now if that case has been previously dismissed or discharge prior to the filing of the offer and compromise and the offer and compromise unit will proceed with reviewing it. The offer and compromise unit, because it's a potential collection action and could be considered a violation of Automatic Stay, would actually be forced to hold on to that offer and compromised submission until the end of the bankruptcy case is reached. So it's a potential Chapter 13 bankruptcy case, and there are no dismissals on it and it goes the full five years, then the offer and compromise unit would probably request after the discharge a updated packet for any liabilities that may still remain under the IRS. Yvette Brooks-Williams: Thank you for that explanation. Let me see if I can find more questions. We have just a few more minutes to go and I want to get as many questions as I can. Give me a second to scroll through here. Sorry about the delay. I just want to make sure.

I'm not picking questions that we've already answered. Okay, I think we've gotten all the questions. Okay, audience that is all the time we have for questions. And I just want to thank our presenters for sharing their knowledge and their expertise and a special thank you to our Subject Matter Experts for answering your questions. So let me see what. So before we close the Q&;A session, Sabina, if you're still there, what key points do you want the attendees to remember from today's webinar? Sabina Makarov: I'm here. Thank you, Yvette. So, we have covered a lot of information in today's webinar. And at the conclusion, we want to emphasize some key points.

First, this compliance with filing and deposits is important. It is important to bring filing current for pre-petition years and keep current with federal tax deposits, estimated payments, and required filings post-petition. In compliance may lead to bankruptcy case dismissal and returning the case to regular collection. Please remember to notify the IRS timely and correctly of bankruptcy filing and it is important otherwise the liability may not be dischargeable. If you have any questions on the IRS' proof of claim, please reach out and communicate with the assigned IRS bankruptcy specialist. Further, we remind that EFTPS is a convenient system to make plan payments, it reduces errors and provides faster payment application. We also talked about plans feasibility, payment plans must adequately provide for IRS claims, including statutory interest on secured claim, in order to avoid objection to confirmation. If the Notice of Federal Tax Lien is recorded and there is an equity in assets, the IRS is a secured creditor. Also in order to avoid the disclosure, bankruptcy specialists can only communicate with attorneys representing the debtor in bankruptcy, and only while the case is open. Information can be shared with power of attorneys with valid Form 2848 only. All other attorney office staff is not authorized to receive taxpayers information from the IRS. Last but not least, please take advantage of the new technologies that the service offers. Use our secure Document Upload Tool to expedite communication with the IRS. You can contract assigned caseworker to obtain one-time use access code. This code is valid for 70 days. The advantage is reduced the amount of correspondence, you can upload scans, photos, or digital copies in the form of jpg, png or pdf with a maximum file size of 15 megabytes per file up to 40 files or a maximum of 120 page limit per file. And with that, that's all I have Yvette, so back to you for closing out. Thank you.

Yvette Brooks-Williams: Thanks Sabina for those key points. Audience, we are planning additional webinars throughout the year. To register for all upcoming webinars, please visit IRS.gov keyword search webinars and then select the webinars for tax practitioners or webinars for small businesses. When appropriate, we will be offering certificates and CPE credit for upcoming webinars. We invite you to visit our video portal at www.irsvideos.gov, there you can view archived versions of our webinars. Please note continuing education credit or certificates of completion are not offered if you view any version of our webinars after the live broadcast.

Again, a big thank you to Alan, Anthony, and Sabina for providing a great webinar and sharing their expertise, and to the Subject Matter Experts Kim and Jerome for answering our questions. I also want to thank you, our attendees, for attending today's webinar, Bankruptcy and the IRS.

Now, if you attended today's webinar for at least 100 minutes after the official start time, you will receive a certificate of completion that you can use with your credentialing organization for two possible CPE credits. If you stayed on for at least 50 minutes from the official start time of the webinar, you will qualify for one possible CPE credit and again the time we spent chatting before the webinar started does not count towards the 50 or 100 minutes. If you are eligible for the continuing education from the IRS and you register with your valid PTIN, your credit will be posted in your PTIN account. If you are eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well.

Now if you qualify and you have not received your certificate and/or credit by June 6, please email us at cl.sl.web.conference.team@IRS.gov. The email address is shown on this slide as well.

If you're interested in finding out who your local stakeholder liaison is, you may send us an email using the address shown on this slide and we'll send you that information. We would appreciate it if you would take just a few minutes to complete a short evaluation before you exit. If you'd like to have more sessions like this one, let us know. If you have thoughts on how we can make them better, please let us know that as well. If you have requests for future webinar topics or pertinent information you'd like to see in an IRS Fact Sheet, a Tax Tip or an FAQ on IRS.gov, then please include your suggestions in the comment section of the survey. So, click on the survey button on the screen to begin and if it doesn't come up, check to make sure that you've disabled that popup blocker. So I just want to say it has been a pleasure to be here with you and on behalf of the Internal Revenue Service and our presenters, we'd like to thank you for attending today's 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. You really do make our jobs a lot easier by sharing the information that allows for proper tax reporting. So thanks again for taking time out of your day to attend today's webinar and we hope you found the information helpful. You may exit the webinar at this time.