IRS Collects Taxes Discharged in Bankruptcy

When the governmet confers a benefit, it invariably puts conditions on the benefit. Congress will often modify the conditions over time. The result can be a very nuanced set of rules that, to the uninitiated, can seem nonsensical and impossible to descipher. The rules that allow taxes to be discharged in bankruptcy fall into this…

IRS Can Avoid Bankruptcy Collection Hold

One of the benefits of filing bankruptcy is that creditors are precluded from taking collection actions.  When a taxpayer who owes unpaid taxes to the IRS files for bankruptcy, this collection hold applies to the IRS.  But what if the IRS could simply file a motion and avoid the collection hold?  This is exactly what…

IRS Pursuit of Additional Taxes After Bankruptcy

One of the benefits of bankruptcy is that it provides some certainty as to what is owed. If successful, the bankruptcy process can provide debtors with a fresh start. But things get complicated when taxes are involved. The recent Breland v. Commissioner, 152 T.C. 9 (2019), case provides an example whereby the IRS was allowed…

Discharging Unpaid Taxes in Bankruptcy

There are circumstances when unpaid taxes can be discharged in bankruptcy.  There are a number of rules involved.  They all hinge on whether a tax return was filed.  The recent United States v. Mayer, No. 16-626-RGA (D. Del. 2018), case provides an opportunity to consider these bankruptcy-tax rules. Facts & Procedural History The case involved the taxpayer’s…

IRS Cannot Collect Taxes Discharged in Bankruptcy

In Internal Revenue Service v. Murphy, No. 17-1601 (1st Cir. 2018), the taxpayer discharged his unpaid taxes in bankruptcy.  The IRS continued to try to collect the discharged tax debt.  The case is a must read for taxpayers who find themselves in this same situation. The Facts & Procedural History The taxpayer in Murphy filed Chapter…