Source: https://www.irs.gov/irm/part5/irm_05-009-013r.html
Timestamp: 2016-12-05 14:46:39
Document Index: 356838420

Matched Legal Cases: ['§ 4971', '§ 507', '§ 501', '§ 341', '§ 502', '§ 502', '§ 502', '§ 726', '§ 523', '§ 1308', '§ 726', '§ 362', '§ 503', '§ 503', '§ 6411', '§ 507', '§ 6658', '§ 6658', '§ 726', '§ 1112', '§ 960', '§ 507', '§ 303', '§ 507', '§ 523', '§ 1328', '§ 301', '§ 301', '§ 1398', '§ 1305', '§ 6020', '§ 6020', '§ 6020', '§ 341', '§ 521', '§ 3302', '§ 3302', '§ 507', '§ 1305', '§ 507', '§ 1305', '§ 1398', '§ 6321', '§ 506', '§ 541', '§ 506', '§ 553', '§ 362', '§ 506', '§ 507', '§ 6672', '§ 4971', '§ 4971', '§ 4971', '§ 4971', '§ 507', '§ 6503', '§ 507', '§ 507', '§ 507', '§ 6213', '§ 362', '§ 502']

Post-petition Mirroring and Claims
(1) This transmits a revised 5.9.13, Bankruptcy and Other Insolvencies, Manual Proofs of Claim and Common Claim Issues.
(1) Editorial changes have been made throughout the IRM, and citations have been updated.
(2) Interim Guidance Memorandum SBSE 05-1015-0065, Interim Guidance on Processing the MFT 65, Individual Shared Responsibility Payment (SRP) Mirror Assessment, in Bankruptcy
Cases, issued on October 6, 2015 was incorporated throughout the IRM.
(3) 5.9.13.9 was updated to provide an additional citation and to provide clarity that the same general process should be
followed to mirror MFT 35 as is used to mirror MFT 30 in decedent spouse cases. (4) IRM 5.9.13.18.4 was renamed to Duplicate and Mirror Assessments and NMF Periods. Additional information was included to
explain handling MFT 65 mirrored assessments and duplicate Trust Fund Recovery Penalty (TFRP) assessments. Also, included
a caution indicating that MFT 31 is also used for restitution based assessments which are not mirrored assessments.
(5) IRM 5.9.13.18.5 was updated to include information that restitution based assessments can be identified as using MFT 31
and having TC 971 AC 102 on the module(s).
(6) IRM 5.9.13.18.6 was updated to include information about MFT 65 as the mirror account for the Individual Shared Responsibility
Payment assessments. Information was also included regarding processing duplicate spousal assessments for the SRP.
(7) IRM 5.9.13.19.3 was updated to include information regarding assessments arising under IRC § 4971 for failure to meet
minimum funding standards of a pension plan. This section was also updated to clarify the language of a priority claim under
11 USC § 507(a)(8)(A)(i).
(8) IRM 5.9.13.20 was updated to clarify when interest is applicable on SRP accounts.
(9) Throughout the IRM, references to Form B10 have been changed to B410 to reflect the new Proof of Claim form number.
This material supersedes IRM 5.9.13 dated May 5, 2015 and relevant portions of Interim Guidance Memorandum SBSE 05-1015-0065, Interim Guidance on Processing the MFT 65, Individual Shared Responsibility Payment (SRP) Mirror Assessment, in Bankruptcy
Cases, issued on October 6, 2015.
5.9.13.1 (09-10-2014)Overview
Claim Purpose. Filing an allowable proof of claim (POC) with the bankruptcy court is the primary method creditors have of receiving funds
in a bankruptcy case. A proof of claim is a statement filed with the bankruptcy court listing debts owed by the debtor to
a particular creditor. This section explains the forms to file with the court, discusses eligible entities, time frames (bar
dates), types of claims, and the criteria for filing amended claims. It provides additional guidance to Insolvency on the
proof of claim process, including calculations, tolling, claim classification, reviews, late filed claims, refiling Notices
of Federal Tax Lien, Section 1305 claims, Limited Liability Companies (LLCs), and trust fund considerations.
5.9.13.2 (09-10-2013)Claim Systems
Automated Proof of Claim (APOC). Automated proofs of claim are generated by Field Insolvency offices through the APOC system. APOC notifies assigned caseworkers
of its inability to complete a proof of claim. The APOC User Guide and IRM 5.9.14, Automated Proofs of Claim, provide detailed information on use of this system. Manual Reviews and Calculations. At times Insolvency caseworkers may have to prepare entire claims without the aid of APOC. More often they will manually
of the reason for manual claim preparation, Field caseworkers must be proficient in calculating and classifying claims without
reliance on APOC. (See IRM 5.9.13.19,Classifying Claims, for guidance in the manual classification of claims, and IRM 5.9.13.20, Claim Calculations, for basic details on calculating proofs of claims.)
5.9.13.3 (09-10-2014)Filing Entities
Who May File a Claim. 11 USC § 501 provides any of the following persons may file a proof of claim for taxable periods considered to be pre-petition
(accrued prior to the bankruptcy filing date): Creditor
Claims Filed on Behalf of IRS. The debtor, co-debtor, or trustee may file a proof of claim on behalf of the IRS. Insolvency will, in most jurisdictions,
Because the trustee may make payments on a claim filed by a third party, the easiest method for a caseworker to account for
the payments on Automated Insolvency System (AIS) is to file an amended claim, even if the amount is less than the tolerance
contained in Exhibit 5.9.13-1. 5.9.13.4 (09-10-2014)Case Reviews
Initial Review. Excepting Chapter 7 No Asset (NA) filings, caseworkers must conduct an initial case review. Initial case reviews must include,
at a minimum, items listed in IRM 5.9.6.9,Opening a Chapter 7 Case, IRM 5.9.8.4,Initial Case Review for Chapter 11, IRM 5.9.9.4, Initial Case Processing for Chapter 12 cases, and IRM 5.9.10.3,Initial Case Review for Chapter 13 Bankruptcy. Manual POC Review. Prior to creating a manual proof of claim, the following issues (beyond the initial case review issues) must be considered:
Previous bankruptcy filings which may affect classification of the claim.
Cross referenced TIN(s) which may indicate liability.
Correspondence sent and responses received.
Bankruptcy freeze input to pre-petition balance due or other pre-petition periods, including creating dummy accounts, as necessary.
Any changes noted between initial case processing and POC preparation.
Caseworkers should remember that when a Chapter 7 NA case converts to Chapter 7 Asset (A) case after the discharge was entered,
any liabilities that were abated must be added to the proof of claim manually, as previously abated periods will not be processed
through APOC. For more information, caseworkers should review IRM 5.9.14.2.2(5), Reopened Chapter 7 Cases, and IRM 5.9.14.2.8(5)(f), Discharged, Dismissed or Closed Date on AIS Flag.
Bankruptcy schedules and Statement of Financial Affairs (SOFA) when appropriate. Stay violations: new/unresolved/status.
The Integrated Data Retrieval System (IDRS) Transaction Codes (TC) outlined in the table below:
Underreporter Program (URP) case which may require contact with the URP bankruptcy coordinator to determine the proposed liability,
if the account is not on Account Management Services (AMS).
Notice of Federal Tax Lien (NFTL), noting the date and location of filing which is necessary to prepare a secured claim, determine
if the NFTL was filed in violation of the automatic stay, or for Field Insolvency, consideration of adequate protection request.
(See IRM 5.9.8.5,Adequate Protection.)
Review for Potential Liability from the Debtor's Business Entities. When the bankruptcy schedules or the SOFA show that the debtor is or has been an officer of a corporation, a partner in a
partnership, or a member of an LLC, the caseworker should research IDRS to determine if the debtor is liable for unpaid taxes
of the entity which should be included on the proof of claim. These may include:
Trust Fund Recovery Penalty (TFRP) assessments. Potential TFRP liability for unpaid employment taxes of a corporation or an LLC.
The debtor may also owe a TFRP liability that has not yet been assessed. Caseworkers should review the Automated Trust Fund
Recovery Penalty program (ATFR), which shows TFRP liabilities that have been proposed but are not yet assessed on IDRS.
Liability for employment taxes of an LLC treated as a disregarded entity for periods prior to January 1, 2009.
Liability for employment taxes of a partnership in which the debtor was a general partner.
These liabilities may also be shown on a non-master file account, as explained in IRM 5.9.13.4.1(1), Case Resource Materials. Information on determining whether the debtor is liable for a business entity's taxes is contained in IRM 5.9.13.14, Limited Liability Companies (LLC), and IRM 5.17.7, Liability of Third Parties for Unpaid Employment Taxes.
5.9.13.4.1 (09-10-2014)Case Resource Materials
Resource Gathering. As part of any review and in preparation for working proof of claim issues, case resource materials should be gathered to
perform a quality case analysis. Some of the materials that may be used include: IDRS Documents. IDRS materials are necessary research tools used in the calculation and classification of a claim, in determining if the
computation or the need to file a POC. The caseworker must review command codes INOLE, IMFOL and/or BMFOL on IDRS. Note:
button or at: http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm.
Command Codes. The table below identifies useful command codes and their purposes.
IRM 2.3.47,Command Codes INOLE, EOGEN and SPARQ, and IRM 2.3.15,Command Code ENMOD
Verify debtor’s name, address and filing requirements. Identify cross reference (XREF) taxpayer identification numbers (TINs)
for which research may be required. IMFOL/BMFOL
IRM 2.3.51,Command Code IMFOL, and IRM 2.3.59,Command Codes BMFOL and BMFOR
a complete history of returns required and filed. Note: These command codes do not reflect pending actions.
collection activity, revenue officer (RO) assignment, bankruptcy freezes, NFTL indicators, and Exam and CI controls.
IRM 2.3.29, Command Codes INTST, ICOMP, and COMPA
Search for potential IMF and BMF TINs when limited information is known. IRPTR
Identifies parties assessed a TFRP and periods covered by the assessment.
IRM 2.3.10,Command Codes MFREQ and RECON
Establishes a tax module on SUMRY. Used for an INTST calculation. Note: If the module is not on SUMRY, then INTST cannot be used. COMPA must be used instead to calculate penalty and interest. InterestNet/Automated
Computation Tool (DMI/ACT) may also be used to compute interest and is preferred for more complex calculations.
IRM 2.8.3, AIMS Command Code AMDIS
Requests information on current audits.
Non-Master File (NMF). NMF research differs from IDRS research and is conducted through the Automated Non-Master File system (ANMF). (See IRM 4.4.22.2.1,Automated Non-Master File Accounting, and IRM 3.17.46,Automated Non-Master File Accounting.) NMF accounts are centralized at the Cincinnati Submission Processing Campus. Debtors may have accounts on ANMF when IRS
and the other debtor on the joint return is contesting the assessment.
Bankruptcy Court Documents. Court documents may be accessed through the electronic court records or can be requested directly from the court. Note:
Management/Electronic Case Files (CM/ECF), Remote Access to Court Electronic Records (RACER), or the website: https://pacer.login.uscourts.gov/cgi-bin/login.pl?court_id=00pcl.
A - Real propertyB - Personal propertyC - Exempt propertyD - Secured creditor claimsE - Priority unsecured creditor claimsF - Unsecured general creditor claimsG - Contracts and leasesH - Co-debtorsI - Current income of individual debtorsJ - Current expenses of individual debtors
This statement must be completed by Chapter 13 debtors who file bankruptcy after October 17, 2005. It provides income and
expense information given in Schedules I and J.
not previously disclosed in the SOFA or schedules, such as other income/expense items, issues concerning potentially fraudulent
activities, or sale of assets. Notices of Federal Tax Lien (NFTL). Notices of Federal Tax Lien reflect the secured claim of the IRS. Facsimiles may be used as attachments to the POC. To be
used to secure a claim in bankruptcy, the Notice of Federal Tax Lien must have been properly recorded pre-petition. Lien facsimiles
may be printed individually from the AIS POC menu (see AIS User’s Guide) or the Automated Lien System (ALS) (see ALS User’s
Guide) for review. However, only the redacted Social Security Number (SSN) lien facsimiles that accompany the printed POC
may be used as attachments to the claim.
Standardized Correspondence. The Service may send correspondence, either manually or systemically, to secure returns or information relative to the preparation
Letters initiated by Insolvency may include AIS Letter 1714, Request for Returns or Return Information, to secure missing or unfiled returns, or other AIS letters as appropriate. Note:
Caseworkers can generate and print AIS letters by going to the AIS Letter Tab and selecting the applicable AIS letter. In
addition to AIS letters/memos, caseworkers may also generate documents by using any approved customized document in Microsoft
Word, Integrated Collection System (ICS), IDRS, SERP, or available on the IRS intranet.
Ad Hoc Correspondence. If the suite of standardized letters does not fit a specific situation, caseworkers may write an ad hoc letter, with managerial
Commercial Systems. Other information systems may be researched on an as-needed basis and may include "Accurint,"
an Internet based research tool for finding people, businesses and assets, and "Lexis-Nexis,"
§ 341 Hearing Review. The first meeting of creditors, also known as the 341 hearing, will usually occur soon after the commencement of the bankruptcy.
Caseworkers should conduct a timely initial case review, allowing ample time to determine if an IRS presence is needed at
the hearing. IRM 5.9.2.5,First Meeting of Creditors, provides more information on 341 hearings. The case history should address whether or not attending the 341 meeting is necessary,
and include a discussion that clearly and fully documents any of the following that apply:
Any case issue which needs to be addressed at the 341 meeting;
Any case issue for which an objection to confirmation of the plan is being contemplated;
Unfiled returns; and
Problems with the plan or motions, including not recognizing the IRS secured or priority claims.
The following are examples of AIS case histories that satisfy the requirement to make a 341 determination:
"Unfiled returns, deposits not being made, TFRP not addressed by field, NFTL filed, possible adequate protection, schedules
show personal property and accounts receivable, need to attend 341 meeting."
"All returns filed, deposits current; no other issues, no need to attend 341 meeting; will contact debtor regarding need to
remain current with filing and depositing."
Plan Review. Field Insolvency specialists or advisors should evaluate bankruptcy plans or plan summaries prior to the confirmation date.
Ample time should be allowed for a referral to Counsel should an objection to the plan be required. Area Counsel can advise
Field Insolvency of lead time needed for effective referral preparation. Stay Violation Review. When initially reviewing cases, caseworkers should access IDRS to determine if stay violations have occurred. Chapter 7 No
Asset cases are excepted from initial case review. (See IRM 5.9.3.6,Automatic Stay.) For individual Chapter 7, 11, and 13 cases filed on or after October 17, 2005, this review should include checking for
previously filed bankruptcies that may affect the imposition of the stay. (See IRM 5.9.5.7,Serial Filers.) Review for Nondischargeability. If the requisite time between previous bankruptcy discharges and a current bankruptcy filed on or after October 17, 2005,
has not elapsed, the debtor may not be allowed a discharge in the current proceeding. (See IRM Exhibit 5.9.5-3, Allowable Elapsed Time Between Bankruptcy Filings, and IRM 5.9.5.7.1(5),Discharge Limitations.)
5.9.13.4.2 (09-10-2014)Liens and Claims
Lien Information. IRM guidance regarding liens, NFTLs, and refiling for cases in bankruptcy is found in IRM 5.9.6.9,Opening a Chapter 7 Case,IRM 5.9.8.4,Initial Case Review for Chapter 11,IRM 5.9.10.3,Initial Case Review for Chapter 13 Bankruptcy,IRM 5.9.5.9.1,NFTL Filing after Bankruptcy Filing,IRM 5.9.5.9.2, Refiling Notices of Federal Tax Lien (NFTLs), and IRM 5.9.17.17(10),Lien Release Revocation and Refile.
5.9.13.5 (03-09-2016)Claims Forms
Form B410. Insolvency completes the AIS–generated Form B410, Proof of Claim, with an attachment (Form B410, Attachment) to provide detailed information on the tax liabilities claimed by the Service. The Form B410 attachment is known internally
as AIS Form 6338 when adding the POC to AIS.
Lien Attachment. Depending on local court requirements, a facsimile NFTL generated by AIS may be included as an attachment to the proof of
claim to support the Service’s secured status. (See IRM 5.9.13.4.1(5), Notices of Federal Tax Lien (NFTL).)
Claim/Gap Period Claims. Form 6338A is used for filing any required claims for administrative (admin) and involuntary gap period taxes. Bankruptcy
Abuse Prevention and Consumer Protection Act (BAPCPA) makes the filing of admin claims optional for cases filed on or after
October 17, 2005. Caseworkers generally should still file a Form 6338A so the debtor, the trustee, and any other interested
parties are aware that administrative expenses are being claimed. (See IRM 5.9.8.14.2(4),Plan Provisions, IRM 5.9.13.11, Administrative Claims, and IRM 5.9.13.12, Gap Period Expenses in an Involuntary Bankruptcy.)
5.9.13.6 (09-10-2014)Proof of Claim Retention
Proof of Claim Data. The Service may have to provide expert testimony in bankruptcy court regarding proof of claim data and computations. Whether
work on the claim must be documented on AIS and retained where appropriate when: An objection to the Service’s claim has been filed.
A referral is made to Counsel to object to a debtor’s plan.
Contact from a debtor or debtor’s attorney, the trustee, or another party indicates the potential for contested or adversary
A POC is amended or withdrawn.
Destruction. POC copies are maintained electronically on the AIS database for a period of 8 years from the date the case is closed. Offices
are not required to maintain paper copies of proofs of claim, unless required by Area Counsel or local procedures. For those
offices that maintain paper copies, with the exception of Chapter 11 claims, destruction of the claim copies should be scheduled
one year after generation unless: The case has ongoing litigation.
Litigation is anticipated.
Otherwise directed by Area Counsel.
If paper copies of the claims in Chapter 11 cases are maintained, the claims should be associated with the case file and destroyed
according to the retention schedule for the file.
5.9.13.7 (09-10-2014)Bar Dates
Court Deadlines. Proofs of claim must be filed by bar dates, deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the courts, for timely filing proofs of claim. To share
in distribution from the bankruptcy estate or to receive payments under a plan, generally a creditor must file a timely proof
of claim. Usually, Insolvency should file a proof of claim as soon as possible after a bankruptcy is filed and at least 30
calendar days prior to the general bar date in all asset cases where the unpaid tax liability exceeds the amount noted in
Exhibit 5.9.13-1.
Governmental Bar Dates. Governmental entities have 180 days from the petition date, or such later time as the Bankruptcy Rules may provide, to file timely proofs of claim. (See 11 USC
§ 502(b)(9).)
General Bar Dates. Bankruptcy Rules 3002(c) and 3003(c) define time limits for filing claims by non-governmental creditors. They are: Under BR 3002 - for Chapters 7, 12 and 13, the time limits are within 90 days of the first date set for the first meeting of creditors; and
AIS and Bar Dates. AIS systemically displays a presumptive general bar date on the entity screen rather than the governmental bar date. When
notice of the bankruptcy case is received electronically (through the Bankruptcy Noticing Center), AIS processing automatically
sets the bar date using the bar date provided on the electronic notice. In the absence of a bar date, AIS defaults the bar
date to 90 days from the petition date unless a caseworker overrides the automatic date. In the event that the caseworker changes the date
to reflect the governmental bar date or some other date, the caseworker should document the history with the original bar
date and the reason for the change.
Bar Date Extension. Bankruptcy Rule 3002(c)(1) allows the government to file a request for an extension before the expiration of the governmental
bar date (180-day period) for cause. Insolvency should consult with Area Counsel, if necessary, to determine if an extension
is merited. The bankruptcy court has the discretion to grant or deny the extension. Chapter 13. In Chapter 13 cases, the bar date for the Service to file a proof of claim in some jurisdictions is often after the confirmation date of the Chapter 13 plan. Whenever possible, in these jurisdictions, Insolvency should file Chapter 13
proofs of claim prior to confirmation. This allows the trustee access to as many claims as possible (including the IRS claim) by the confirmation
hearing date to determine if the plan is feasible. Chapter 13 Bar Date Extensions. For Chapter 13 cases, 11 USC § 502(b)(9) allows the Service to file a claim the later of 60 days after the debtor's filing
of a pre-petition return or the governmental bar date. This provides the Service an opportunity to file claims where the return
Bar Dates and Conversions. In the event of conversion, the court will often state the new bar date on the conversion notice or provide a special notice
to indicate a bar date. If the bar date is not stated, Insolvency may establish the new bar date by adding 90 days to the new date of the first meeting of creditors. Bar Dates, Conversions, and Administrative Taxes. In cases of conversion, where administrative taxes of the original case remain unpaid, interest and failure to pay penalty
are claimed and allowed as an administrative expense only to the date of conversion.
Reporting Expired Bar Dates. If a bar date has expired, the person identifying the missed bar date will, within 10 days, complete Part A of Form 14167,
Bar Date Expiration Report, and will enter a statement in the Automated Insolvency System (AIS) case history indicating that a preliminary Form 14167
has been prepared. If not prepared by the group manager, the completed Form 14167 should be forwarded to the group manager
The report will not be required for expired bar dates in cases where the Service did not receive notification of the bankruptcy
prior to the last day for filing a proof of claim as defined in Bankruptcy Rule 3002(c) or 3003(c), whichever is applicable.
5.9.13.7.1 (09-10-2014)Late Filed Claims
Late Claim May Not Be Allowed or Paid. Except in Chapter 7 cases, a late claim may be disallowed under 11 USC § 502(b)(9) and may not be paid. If the Service did
not receive notice of the bankruptcy case in order to file a timely claim, caseworkers should follow the procedures outlined
in paragraph (6) below. Note:
If a liability is discovered after the bar date for filing claims has passed, and if the liability was not listed on a timely
Chapter 7 Late Claim Allowed. For Chapter 7 cases filed prior to October 17, 2005, if a claim was untimely filed, the IRS can still receive full payment
claims are to be paid with timely filed priority claims (11 USC § 726(a)(1)) if they are filed by the earlier of: The date that is ten days after the mailing to creditors of the summary of the trustee's final report, or
Chapter 13 Caution. When a liability is discovered after the governmental bar date in a Chapter 13 proceeding and Insolvency cannot cite special
IRM 5.9.13.7(7), Chapter 13 Bar Date Extensions, discusses special consideration given in Chapter 13 cases for tax claims based on returns filed after the government bar
Considerations for Late Filing. If a proof of claim is not filed prior to the bar date, Insolvency must decide if a late filed claim is warranted. If a claim was not filed because the IRS did not receive sufficient notice for a timely claim to be filed, the procedures
in paragraph (6) below should be followed. A decision to file a proof of claim after the bar date has passed should be based on: Reasons the claim was not filed prior to the government’s bar date Amount of the claim
Chances that the claim will be paid by the trustee in a specific court jurisdiction
Favorable legal rulings on late filed claims in a specific jurisdiction Support of Area Counsel to file a late claim
Likelihood of future collection (either through or outside of the case) If the claim meets the criteria noted in Exhibit 5.9.13-1
Counsel Review. Generally Counsel should be consulted after Insolvency determines a late claim should be filed to add a tax debt, exceptions
Notice Received with Insufficient Time to File A Timely Proof of Claim. 11 USC § 523(a)(3) states 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. This provision does not apply if the creditor otherwise
has timely notice or actual knowledge of the case. Note:
This provision applies in Chapter 7 asset, Chapter 11, Chapter 12 and Chapter 13 cases. It does not apply to Chapter 7 no
asset cases, as no proof of claim is filed.
The Bankruptcy Code does not give a minimum time period by which a debtor must give notice of the bankruptcy filing in order
for the notice to be timely. Based on court decisions and the procedures used to create and file a proof of claim, notice
received 30 calendar days or more before the expiration of the bar date will always be considered to be timely. Notice received
less than 18 calendar days before the bar date will be considered to be untimely. Caseworkers should follow the procedures
below when notice is received 18 days or more but less than 30 days before the bar date.
If the bar date has not expired when notice is received, caseworkers should make every effort to file a proof of claim before
the bar date passes, even when notice is received less than 18 calendar days before the bar date. Caseworkers should not refrain
from filing a proof of claim in order to have the taxes treated as nondischargeable because the notice was not received timely.
When notice is received late based on the time periods above, the caseworker should first check to see if the Internal Revenue
Service was listed as a creditor prior to receipt of the current notice. It will be necessary for caseworkers to check the
creditor mailing matrix, the original Schedules D, E and F, any amendments to Schedules D, E and F, any documents stating
an amendment has been made to the creditor mailing matrix, and any other pertinent documents on PACER to determine if the
Internal Revenue Service was listed as a creditor prior to receipt of the current notice. Caseworkers should be aware that
when the creditor mailing matrix is amended to show additional creditors, the creditors are added to the matrix but there
is no indication to show when they were added. However, any amendments made to the creditor mailing matrix will be shown on
the PACER docket report. The method of reflecting these amendments varies between courts. If notice was previously given to
the correct address 30 calendar days or more before the expiration of the bar date, the notice should be treated as timely
even if the Internal Revenue Service did not receive this notice. In this situation, caseworkers should note the details of
the prior notice in the history and process the case without following the procedures below for a late notice.
The bar date field on AIS generally displays a presumptive general bar date. Caseworkers should not rely on this as being
the bar date, but should also compute whether the governmental bar date has expired, using the period of 180 days from the
filing of the petition. Additionally, if the bar date has not expired because of some other procedure, such as when a new
bar date is set after a case is converted, the bar date should also be considered to be open even if AIS shows it as expired.
If the bar date has expired when notice is received, but the proof of claim will still be allowed under provisions of the
Bankruptcy Code or under local procedures, the proof of claim should still be filed. Example:
The Internal Revenue Service can still receive payment for priority taxes on a proof of claim filed after the bar date in
a Chapter 7 asset case if the proof of claim is filed on or before the earlier of: (1) the date that is 10 days after the
mailing of the summary of the trustee's final report; or (2) the date on which the trustee commences final distribution of
In some jurisdictions, a proof of claim is considered to be timely in a Chapter 13 case even when filed after the bar date
if the debtor failed to give timely notice of the bankruptcy to the affected creditor.
If notice is received less than 18 calendar days before the bar date or after the bar date has expired, and a late proof of
claim will not be allowed under the Bankruptcy Code or local procedures, no proof of claim is required to be filed where the
caseworker determines the claim cannot be timely filed. The caseworker should obtain managerial approval for any decision
not to file a proof of claim. The caseworker should document the history as to when and how the notice was received, and why
it was not possible to file a timely proof of claim. The manager should document the history with a concurrence that a claim
should not be filed. The case should then be processed as nondischargeable as set out below.
If the case was received 18 calendar days or more but less than 30 calendar days before the bar date, the caseworker should
consider consulting Area Counsel on whether the courts in the jurisdiction where the case is pending have established a firm
date by which notice will be considered to be untimely. The caseworker may also want to consult Counsel if notice was received
during this time period and exceptional circumstances, such as a system outage, prevented the caseworker from filing a proof
of claim before the expiration of the bar date. When notice is received less than 30 calendar days before the bar date or
after the bar date expiration and the caseworker has determined that a proof of claim could not be timely filed, the caseworker
should consider whether a suit referral should be made to Counsel. A referral should be made for a suit to determine dischargeability
when it is questionable if the notice was untimely before treating the taxes as nondischargeable. Caseworkers should apply
the tolerance amounts for referrals contained in IRM 5.9.4.14.4,Referral Tolerances absent exceptional circumstances.
At the time the caseworker determines that a timely proof of claim cannot be filed, the "NoNotice"
classification should be added to the case classification screen on AIS. Caseworkers should follow the procedures in IRM
5.9.5.4(6), Classifications and Summary Histories, for AIS history documentation, but should use the "NoNotice"
classification rather than inputting "PDSC"
When a caseworker makes a determination that a timely proof of claim cannot be filed and the manager concurs, the history
should be documented to show: (1) when notice was received, (2) when the bar date expired, (3) if notice was received prior
to the expiration of the bar date, a detailed explanation as to why a proof of claim could not be timely filed, (4) concurrence
by the manager in any decision not to file a proof of claim when notice was received prior to the expiration of the bar date,
(5) any opinion received from Counsel, and (6) a statement that the liabilities are nondischargeable due to lack of timely
5.9.13.8 (09-10-2014)Amended Claims
Amendments. If a proof of claim has been timely filed and situations warrant, an amended claim may be filed as necessary to claim the
all liabilities are determined (for example, TFRP).
Post-Audit Increase in Claim. When the amount of a proof of claim may substantially increase upon the completion of an examination, IRS should inform the
Amendments after the Bar Date. The standards vary for allowing amendments to proofs of claim after the bar date. Generally: Courts consider the similarity between the initial claim and the late-filed amendment;
is filed under 11 USC § 1308 or for amendments under 11 USC § 726(a)(1).
No Amendment Required for Court Payments. No amendment or withdrawal of claim is required to reflect decreases in the amount of the claim as a result of payments received
Setoffs. An amended claim or a credit letter, depending on local procedure, must be sent to the trustee when the IRS exercises its
right to setoff a pre-petition income tax refund against a pre-petition income tax liability under 11 USC § 362(b)(26) for
cases filed on or after October 17, 2005, or when the IRS exercises its right to setoff a pre-petition tax refund against
a pre-petition tax liability when a court order lifts the automatic stay for that purpose.
Amendments after Confirmation. Some courts will not permit amended claims to list larger liabilities after confirmation. Also, some courts will not allow
the classifications of the claim to be changed after the plan has been confirmed unless a motion for reconsideration is filed.
If this is required in a given area and IRM 5.9.4.14.4, Referral Tolerances, criteria are met, Insolvency should send a request to Counsel to have such a motion prepared to protect the government’s
5.9.13.9 (03-09-2016)Post-petition Mirroring and Claims
Decedent Primary Taxpayer. When a primary taxpayer on a joint return dies, the case is generally closed TC 530 cc 08. The CSED is not systemically suspended
by the TC 520 on those tax modules if the surviving secondary spouse subsequently files bankruptcy. The tax modules will need
to be mirrored or split for MFT 30 and mirrored for MFT 35. When appropriate, the same general process should be followed
to mirror MFT 35 as is used to mirror MFT 30. IRM 5.9.17.21.3, Decedent Secondary Spouse, provides instructions when a module will be mirrored or will require split processing.(IRM 5.9.17.21.6,MFT 31 Splits, provides instructions on generating a manual MFT 31 split.) If this decedent condition is identified prior to filing a proof
of claim, the claim and the AIS plan screen (excepting Chapter 7 Asset cases) must reflect the secondary spouse's SSN. If
a claim has already been filed with the court under the decedent's SSN, an amended claim need not be filed, but the AIS plan
screen (excepting Chapter 7 Asset cases) must be updated to reflect the proper MFT code (31) and the debtor's SSN. The TC
530 cc 08 must be reversed on the surviving spouse's MFT 31 module(s). Examination Adjustments. Examination may request that the CIO generate an MFT 31 mirror for an innocent spouse situation or petitions to Tax Court.
(See IRM 5.9.4.3.1, Examination and MFT 31 Mirrors.) If the proof of claim has been filed and the AIS plan screen loaded, the MFT on the AIS plan must be changed from 30 to 31.
If the non-debtor primary spouse's liability has been abated in part or in full in the case of an innocent spouse claim, the
SSN on the plan screen must be changed to reflect the secondary spouse. It is not necessary to amend the proof of claim unless
the balance owed by the debtor spouse is adjusted by Examination. The CIO unit creating the MFT 31 mirrors must transfer the
case to the Field Insolvency group responsible for the proof of claim after completion of the MFT 31 mirror if an amended
claim is required. If only the plan screen needs to be updated, the assigned CIO unit will make the necessary corrections.
5.9.13.10 (09-10-2014)Section 1305 Claims
Post-Petition Debts. Because of the complexity of procedures and considerations relating to 1305 claims, the discussion of this type of claim
is contained in IRM 5.9.10.9.2,11 USC Section 1305 Claims.
5.9.13.11 (09-10-2013)Administrative Claims
Claims. Administrative tax claims (often referred to as "admin"
claims) are filed for tax liabilities incurred post-petition by the bankruptcy estate. The date a tax liability is incurred,
the date of the bankruptcy filing, and the entity incurring the tax are the primary factors determining if a tax is a pre-petition
claim against the estate, a post-petition administrative expense of the estate, or a post-petition liability of the debtor.
For cases filed on or after October 17, 2005, 11 USC § 503(b)(1)(D) provides that the Service does not have to file a request
for payment of administrative expenses for the expenses to be allowed. However, an administrative expense claim generally
should be filed because it puts the debtor and creditors on notice as to the amounts due. It also assists in the referral
of the case to Counsel for dismissal or conversion and helps ensure the liabilities will be treated as an allowed administrative
expense. Note:
tax refunds received by the estate after the petition date are also entitled to administrative claim priority status, pursuant to 11
USC § 503(b)(1)(B)(ii), whether or not the "quickie"
business filing an application for a net operating loss (NOL) or a business credit carryback from any pre-petition or post-petition
taxable year. (See IRC § 6411 and IRM 5.9.8.8,Quickie Refunds.)
Second Highest Priority. Administrative expenses enjoy the second highest priority of payment under 11 USC § 507.
Characteristics. Administrative expenses have the following unique characteristics: They accrue penalties and interest to the date of payment. In Chapter 11 cases, caseworkers should include the administrative
taxes, interest and penalties on Form 6338A.
In a Chapter 11 case, the interest and penalties on an administrative claim are also an administrative expense, entitled to
payment as second priority. The debtor-in-possession or trustee may request relief under IRC § 6658 from any penalties based on the failure to pay Chapter
7 or Chapter 11 administrative taxes, if the debtor-in-possession or trustee obtained an order from the bankruptcy court finding
that there was a probable insufficiency of funds available to pay the taxes. No relief may be granted if the taxes which were
not paid were trust fund taxes. Application of IRC § 6658 is discussed in IRM 5.9.4.13,Failure to Pay Tax Penalty and Failure to Pay Estimated Income Tax Penalty.
In Chapter 11 cases, administrative claims are required to be paid in full on the effective date of the plan, unless the plan
after the administrative claims of the Chapter 7 estate (11 USC § 726(b)). Caseworkers should file a Form 6338A for the Chapter
11 administrative taxes in the Chapter 7 case, and include all interest and penalties accrued up to the date of the conversion.
After conversion, interest will continue to accrue on any administrative claims, including those incurred pre-conversion,
but interest accruing postconversion is not entitled to payment as an administration expense. It is relegated to fifth priority
in the Chapter 7 distribution scheme. Any penalties accruing after the conversion will be entitled to payment as a fourth
priority claim. As a matter of policy, the failure to pay penalty does not continue to accrue postconversion with respect
to trust fund taxes.
For cases filed on or after October 17, 2005, failure to pay administrative taxes is a specific reason for conversion or dismissal
of a case under 11 USC §§ 1112(b)(4)(I) and 1116(6)(B) and 28 USC § 960.
According to the Supreme Court's decision in United States v. Noland, 517 U.S. 535 (1996), a bankruptcy court cannot subordinate administrative penalties incurred in a Chapter 11 case which
converts to Chapter 7 unless there are facts justifying "equitable subordination."
The courts have split on whether this requires the trustee to show that the creditor committed misconduct. If a Chapter
7 trustee requests equitable subordination of penalties incurred in a Chapter 11 case, caseworkers should consult Area Counsel.
Conversion of a Chapter 11 Case After Confirmation. Confirmation of a Chapter 11 plan revests the property of the estate back in the debtor, unless the plan provides otherwise.
When a Chapter 11 case converts to Chapter 7 after a plan is confirmed, there is no longer any property of the estate for
the Chapter 7 trustee to administer. If a post-confirmation conversion occurs and the Chapter 7 case is classified by the
debtor as an asset case, caseworkers should consult Area Counsel on how any outstanding liabilities should be treated on a
The Gap Period. In the "gap period"
Priority Status. Such a claim is entitled to priority status after payment of administrative expenses under 11 USC § 507(a)(3). Also see 11
USC §§ 303 and 502(f).
Form. Form 6338A can be used to file this type of claim.
5.9.13.13 (09-10-2013)TFRP Assessments - Priority Status
Trust Fund Recovery Penalty. TFRP assessments are entitled to priority status on the Service’s claim, unless entitled to a secured position due to a valid Notice Federal Tax Lien (NFTL). (See
11 USC § 507(a)(8)(C) & (G).)
Treated as Tax. Even though the Trust Fund Recovery Penalty may be thought of as a penalty, it is not treated as one. Rather, the TFRP is
treated as a tax and is never listed as an unsecured general claim, regardless of the date of the TFRP assessment.
Multiple Persons Assessed the TFRP. Problems may arise with proofs of claim involving TFRPs that have been assessed against more than one party. Counsel should
a TFRP for the same module(s). The assessments may either be in the same or differing amounts. When AIS computes the total
amount of a claim on Form B410, the sum equals the amounts of each module. That total amount computed by AIS cannot be systemically
overridden, so when both spouses have duplicate trust fund assessments, the amount of the claim on Form B410 is overstated.
Caseworkers should follow the procedures outlined in IRM 5.9.13.18.4,Duplicate and Mirror Assessments and NMF Periods, choosing the appropriate option based on local procedures.
Caseworkers should not assume that assessments made against both a husband and wife for the same period are duplicates simply
because they are for the same tax period. Before assessments are treated as duplicates, caseworkers should verify that the
trust fund recovery penalties are for the same underlying business entity's liability, and are not for different entities.
Collection of Proper Amount. The IRS must not over-collect. The Service’s policy is to collect the unpaid trust fund taxes only once.
Nondischargeability in Individual Chapters 7, 11, 12 and 13. As provided in 11 USC § 523(a)(1)(A), trust fund taxes are not discharged in individual Chapter 7, 11, and 12 cases. BAPCPA
has amended 11 USC § 1328(a)(2) so trust fund taxes in Chapter 13 cases filed on or after October 17, 2005, are also not dischargeable
5.9.13.14 (09-10-2014)Limited Liability Companies (LLC)
LLC Proofs of Claim. When the Service receives notice an LLC has filed bankruptcy, Insolvency must determine how the LLC is classified for federal
tax purposes before a proof of claim can be prepared. The classification of LLCs for federal tax purposes is determined by
the provisions of Treas. Reg. § 301.7701-3. (See IRM 5.1.21.3, Characteristics of a Limited Liability Company (LLC), and IRM 5.1.21.4,Classifications Available to LLC Entities.) For federal tax purposes, an LLC may be:
Classified as an association taxable as a corporation,
Classified as a partnership, or
Disregarded as an entity separate from its owner, known as a "disregarded entity."
An otherwise disregarded LLC is treated as a corporation for employment taxes on wages paid on or after January 1, 2009 and
as a separate entity for certain excise tax liabilities imposed and actions first required or permitted in periods beginning
When an LLC is wholly owned as community property by husband and wife and the income is reported on a Form 1040, the LLC is
disregarded. If the income is reported on a Form 1065, the LLC is classified as a partnership.
Income Taxes. The income tax filing requirements for an LLC are determined by its classification.
An LLC that is classified as a partnership or as an association taxable as a corporation is required to report income in the
name and EIN of the LLC.
An LLC that is a disregarded entity has no income tax filing requirement. The income and expenses pass through to the single
member owner (SMO) and are reported on the SMO's income tax return. If the SMO is an individual, items of income or expense
pass through to the SMO as if the business were a sole proprietorship. If the SMO is another entity type, items of income
or expense pass through as if the business were a branch or division of the SMO's business.
Employment Taxes on Wages Paid Prior to January 1, 2009. Under applicable regulations, the liable taxpayer is determined by the classification of the LLC during each tax period. When
the LLC is classified as a partnership or as an association taxable as a corporation, the LLC is liable for employment taxes.
For tax periods ended before January 1, 2009, a disregarded LLC has no liability for employment taxes; the SMO of the LLC
is the liable party.
Notice 99-6 allowed the owner of a disregarded entity to report employment taxes on wages paid prior to January 1, 2009 in
the name and EIN of the LLC, even though the SMO is ultimately liable for their payment. Therefore, it may appear that the
LLC owes the liability, when in fact the SMO is the liable taxpayer. You must identify the classification of the LLC to determine
the liable taxpayer when employment taxes are assessed in the name and EIN of the LLC. Notice 99-6 is obsolete as of January
In community property states, when an LLC is wholly owned by a husband and wife as community property and the income from
the LLC is reported on the spouses' Form 1040, the LLC is disregarded. The community of the husband and wife is the liable
for employment taxes on wages paid prior to January 1, 2009 that were reported in the name and EIN of the LLC. If the income was reported
on a Form 1065, the LLC would be the liable taxpayer for employment tax purposes.
Employment Taxes on Wages Paid on or After January 1, 2009. Under applicable regulations, the LLC is always liable for these employment taxes, even when it is a disregarded entity for
federal income tax purposes. Treas. Reg. § 301.7701-2(c)(2)(iv)(B). Caseworkers should consider whether it is necessary to assert the TFRP
against the members and/or managers of the LLC, if a TFRP determination has not already been made.
Excise Taxes. When the LLC is classified as a partnership or as an association taxable as a corporation, the LLC is liable for excise taxes.
For excise tax periods ended prior to January 1, 2008, when the LLC is a disregarded entity, the owner is liable for excise
taxes. Under the applicable regulations, the LLC is liable for certain excise tax liabilities imposed and actions first required
or permitted in periods beginning on or after January 1, 2008. Reminder:
Excise taxes are reported in the name and EIN of the liable taxpayer; therefore, the taxpayer for excise taxes is identified
in the assessment. When the assessment is made in the name and EIN of the LLC, the LLC is liable.
5.9.13.14.1 (09-10-2013)Limited Liability Company as Debtor
Proof of Claim. Include the following liabilities on a proof of claim in the LLC's bankruptcy:
Income tax liabilities assessed in the name and EIN of the LLC.
Excise tax liabilities assessed in the name and EIN of the LLC.
Employment taxes reported in the name and EIN of an LLC that elected to be classified as an association taxable as a corporation
Employment taxes on wages paid on or after January 1, 2009, regardless of the classification of the LLC.
Employment taxes on wages for tax periods ended before January 1, 2009 where the LLC is a disregarded entity are not included
on a proof of claim in the LLC's bankruptcy, as the SMO is liable for those taxes.
Disregarded Entity Employment Taxes. A proof of claim will generally not be filed in the LLC's bankruptcy when the LLC is a disregarded entity for employment tax
periods ended before January 1, 2009. However, even if an LLC is presently a disregarded entity, it may still be liable for
taxes that arose out of periods when it was not a disregarded entity or when an entity of which the LLC is the successor was
not disregarded. When a disregarded LLC is liable for taxes that arose out of periods when it was not a disregarded entity
or when an entity of which the LLC is the successor was not disregarded, a proof of claim should be filed.
Collection Against SMO. When a single member disregarded entity LLC files bankruptcy, but the SMO does not, collection action may continue for employment
tax liabilities owed by the SMO that were reported in the name and EIN of the LLC for wages paid prior to January 1, 2009.
The liability is owed by the SMO rather than by the LLC in bankruptcy. In this case a TC 520 cc 84 should be input on the
applicable modules under the LLC EIN as an alert to field Collection to contact Insolvency before taking enforcement action.
Upon contact, the revenue officer will be advised by Insolvency to pursue collection from the SMO and not the LLC.
Protective Claim. If the tax status of the LLC cannot be determined prior to the bar date, Insolvency should file a protective proof of claim
Counsel Guidance. To ensure the government's interests are protected, Area Counsel may be consulted when issues arise related to claims against
LLCs that cannot be easily resolved. 5.9.13.14.2 (09-10-2013)Owner of Limited Liability Company as Debtor
Proof of Claim. Include the following liabilities on a proof of claim when the owner of an LLC files bankruptcy:
Income taxes reported in the name and TIN of the owner.
Excise taxes assessed in the name and EIN of the owner.
Employment taxes on wages paid before January 1, 2009 for a disregarded entity LLC reported in the name and EIN of the SMO
or the name and EIN of the LLC.
Trust fund recovery penalty liability against the SMO, if applicable, for employment or excise tax periods where the LLC was
Determining Liable Party. When a single member owner is the bankruptcy petitioner, Insolvency may not be aware of a liability arising from the activities
of a disregarded LLC. IDRS and CFOL do not identify if LLCs are disregarded, nor do they cross-reference LLC EINs to the single
member's SSN. The debtor's bankruptcy plan or schedules may identify the debtor's ownership of an LLC and if it is a disregarded
entity for tax purposes. If the plan or schedules do not identify whether an LLC is a disregarded entity, and the LLC's classification
cannot be determined by checking internal sources identified in IRM 5.1.21, Collecting from Limited Liability Companies, the caseworker should consider questioning the debtor at the 341 meeting or directing an OI to a revenue officer to obtain
this information. If the caseworker cannot determine the status of the LLC by following these avenues, the caseworker may
consider referring the case to Area Counsel to pursue a Bankruptcy Rule 2004 examination of the debtor to obtain this information.
Protective Claim. If the tax status of the LLC cannot be determined prior to the bar date, a protective proof of claim should be filed with
an annotation explaining the IRS has not been able to ascertain if the debtor is the person liable for the tax.
Counsel Guidance. To ensure the government's interests are protected, Area Counsel may be consulted when issues arise in determining liabilities
that cannot be easily resolved.
5.9.13.15 (09-10-2013)Consolidated Chapter 11 Filings
Group Income Tax Liabilities on Proofs of Claim. Because every member of a consolidated group is severally liable for the group’s income tax liabilities, the Service should generally file separate claims in each member’s bankruptcy case and should list the entire group’s income tax liability, even in a jointly administered case. Local rules or standing orders may specify filing of one proof of claim listing both
separate and group liabilities for a jointly administered consolidated group. In all cases, Area Counsel and Large Business and International (LB&I) should be consulted before filing a claim for the entire
group liability.
Treatment of Employment Taxes. Employment tax liabilities should be treated as belonging solely to the subsidiary that is shown as the employer of record.
Excise Taxes. Generally, excise taxes should be treated as belonging solely to the subsidiary that is liable for: (1) paying the tax itself;
or (2) paying over the taxes it collected. But exceptions may apply. When claims for excise tax liabilities are being considered,
Area Counsel must be consulted. 5.9.13.16 (03-01-2006)Criminal Investigation Involvement
CI Involvement on Cases. If, at any time, research identifies Criminal Investigation’s (CI) involvement on accounts assigned to Insolvency, even if
civil and criminal cases. (See IRM 5.9.4.11,Bankruptcy Fraud, and IRM 5.9.4.12,Criminal Investigation (CI) Controls on Tax Accounts.) Reminder:
5.9.13.17 (09-10-2014)Below Tolerance - Non-Filing of a Proof of Claim
Tolerance for Filing a Proof of Claim. The tolerances listed in Exhibit 5.9.13-1 allow for the non-filing of proofs of claim when criteria listed in the Exhibit are met. Note:
APOC files systemic claims well under the required criteria.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Claim Considerations. In cases where the outstanding balance is less than stated in Exhibit 5.9.13-1(below tolerance), Insolvency’s determination to file a manual claim should be based on various factors, including: Cost of filing a claim in relation to what is owed.
Potential for collection.
Filing of Claim Optional. The established tolerance amount does not preclude or prohibit Insolvency groups from filing a proof of claim in any case,
5.9.13.18 (09-10-2014)Claim Periods
Pre-petition versus Post-petition Income Taxes. During the proof of claim preparation, Insolvency must distinguish if a tax account is a pre-petition or a post-petition
tax liability. When Income Tax Liabilities Arise. Income tax liabilities arise at the end of the taxable period. However, see paragraph (c) below with respect to corporate
income taxes. Example:
Chapters 7 and 11 - Individuals. Pursuant to IRC § 1398, individuals in Chapter 7 and 11 cases can elect to treat the taxable year in which the bankruptcy
for this year, therefore, becomes pre-petition. The second year begins on the day the bankruptcy petition is filed. The liability for this year is post-petition.
Corporate Income Tax – "Split"
Liability Pre-BAPCPA. For cases in the 8th, 9th, and 11th Circuits filed before October 17, 2005, petition-year liabilities in corporate Chapter
7 and 11 cases could be split into pre-petition and post-petition portions, usually by prorating the liabilities based on
the number of pre-petition and post-petition days. These authorities should be followed in their respective jurisdictions,
but only with respect to income tax liabilities in corporate Chapters 7 and 11 cases. Counsel should be consulted to determine
the rule for a particular jurisdiction.
BAPCPA Provision. For cases filed on or after October 17, 2005, in the case of priority income tax claims, there is no split liability as decided
by the three Circuit Courts of Appeal. Pre-petition priority income tax claims are defined as taxes for taxable years ending
Pre-petition versus Post-petition Employment Taxes. An employer's liability for employment taxes accrues when the wages in question are paid. For debtors who owe employment
taxes and file bankruptcy during a quarter, the employment taxes attributable to wages paid pre-petition should be included
on the proof of claim as a pre-petition priority tax. In addition, wages which do not exceed a certain amount (currently $12,475)
that were earned during the 180 days (90 days pre-BAPCPA) before the petition date or the cessation of the debtor's business,
but have not been paid, are included on the proof of claim as a pre-petition priority tax. 11 USC 507(a)(4). The amount may
need to be estimated until the employment tax return is actually filed. The employment taxes for the remainder of the quarter
will be claimed as an administrative expense.
Post-petition Claims. Administrative claims and 11 USC § 1305 claims for post-petition liabilities may be filed by the Service during the pendency of a bankruptcy. (See IRM 5.9.13.11, Administrative Claims, andIRM 5.9.13.10, Section 1305 Claims.)
5.9.13.18.1 (09-10-2014)Unassessed Claims
Protecting the Government’s Interests. By meeting the bar date time frame, an "unassessed"
tax liability once a debtor files a return, or Examination determines the amount of a tax liability or tax deficiency.
Factual Basis. The Service’s unassessed claim must have a factual basis and cannot be inflated. The unassessed tax liability must be based
Insolvency employees should not expend unnecessary resources if evidence indicates the probability a refund or a no tax due
Base on Resources Available. The resources Insolvency may use to obtain a factual tax basis include, but are not limited to: IDRS data using command codes such as IRPTR, PMFOL, RTVUE, and BRTVU
RO field involvement or prior litigation has taken place. Insolvency should review AIS, ICS, and paper files as available.
Liability on Last Filed Return (LFR) for IMF. In preparing a manual proof of claim, if the caseworker is relying on the LFR as a basis for estimating unfiled returns,
the caseworker should use the LFR total of assessed tax transaction codes (TC 150, 290, 300, etc.) less any credits (TC 640,
650, 660, 670, etc.) appearing on the tax module being estimated in calculating the total tax due. To the LFR figure, the
caseworker must increase the total tax due 5% on an annual basis to allow for inflation. Example:
The LFR is 2009, and the unfiled returns are for 2010 and 2011. The total tax due on the 2009 period is $50,000. Using the
5% increase for 2010, the estimated tax due is $52,500 ($50,000 X 1.05) less any credits showing on the 2010 tax module. The
estimated tax for 2011 is $55,125 ($52,500 X 1.05) less any credits appearing on the tax module for 2011.
Liability on LFR for BMF. Business tax returns are based on quarterly filings (such as Form 941), calendar year filings (such as Form 940 or Form 944),
Quarterly Returns. For estimating quarterly returns such as Forms 941, the caseworker should calculate the tax on the LFR period in the same
year, the unassessed claim is based on the LFR for that calendar year. However, if an unfiled quarterly return occurs in the
next calendar year when the LFR was received for the prior year, 5% is added to the tax liability for the LFR. That dollar
The second quarter Form 941 for tax year 2010 is the LFR and has a tax liability of $10,000. Unfiled returns for the third
and fourth quarters of 2010 are estimated at $10,000. Forms 941 for the first and second quarters of tax year 2011 also have
not been filed. The estimated amount for each of those periods is $10,500 ($10,000 X 1.05).
Annual Returns/Fiscal Year Returns. For estimating unfiled annual or fiscal year returns such as Forms 940, 944, or 1120, the estimated tax is calculated by
Sporadic Filings. If unfiled returns are mingled between filed returns, the LFR period is based on the most recent LFR prior to the unassessed
For tax year 2010, the second quarter Form 941 is the LFR with a liability of $5,000. A Form 941 return has not been filed
for the third quarter of that tax year. A return has been received for the fourth quarter of tax year 2010 with a liability
of $6,000, but no return has been received for the first quarter of tax year 2011. Following the instructions above, the unassessed
claim for the third quarter of tax year 2010 is $5,000. The estimated liability for the first quarter of tax year 2011 is
$6,300 ($6,000 X 1.05).
Penalties and Interest. All applicable pre-petition penalties and interest for filed returns with pending assessments should be computed and claimed. If unassessed liabilities are listed for unfiled returns, penalties and/or interest do not have to be computed unless required by local guidelines.
IRC § 6020(b) Returns. Periods for which tax returns are prepared by the Service under authority of IRC § 6020(b) should be considered to be unassessed
Delegation Order 5-2 (Rev. 1) gives designated Field Insolvency caseworkers the authority to prepare and execute IRC § 6020(b)
Tax Subject to Deficiency Procedures. Taxes subject to deficiency procedures remain estimates unless the taxpayer signs a consent to assessment or the liability
is determined by the Tax Court. If the taxpayer disagrees with the proposed assessment or fails to respond within the 30 day
period, the Service must then issue a statutory notice of deficiency which allows the taxpayer to file a Tax Court petition.
The automatic stay does not prevent the Service from issuing the notice of deficiency. However, the stay prevents the individual
taxpayer from filing a petition with the Tax Court during bankruptcy for pre-petition deficiencies. The stay prevents a corporate
debtor from petitioning the Tax Court for a taxable period the bankruptcy court may determine, which includes pre-petition
and post-petition periods. Closing Codes (cc). When an estimated claim is filed, the closing code assigned to the TC 520 freeze on the estimated period should be cc 60 or
cc 61 to prevent erroneous refunds. IRM 5.9.5.6.1, Closing Codes, explains the conditions for each closing code.
AIS Statements. The proof of claim should include a statement identifying the reason for the unassessed liability. A support file in AIS
contains allowable standardized statements. Liability Not Pursued. After a proof of claim has been filed with unassessed (estimated) amounts, and a determination is made the estimated liability
any trustee payments received must be refunded to the trustee. If trustee payments have been applied to periods that are no
longer being pursued, the payments need to be moved to other balance due periods, or refunded to the trustee, whichever action
is appropriate. Zero Amendment. The Electronic Proofs of Claim (EPOC) system does not allow for electronic withdrawal of claims. Because of this, for most
courts a claim is withdrawn by filing an amended claim for $0.00. A few courts do not accept this method as a withdrawal of
the claim, and require the Service to send a letter instructing the court to remove a specific claim from the claims register.
For those courts, caseworkers can generate Letter 3931, Request to Withdraw Administrative Proof Claim, on AIS for mailing
5.9.13.18.2 (09-10-2014)Addressing Unfiled Returns
Delinquent Return Limits. Standard IRS practice usually limits the pursuit of unfiled returns to the prior six years. In certain instances the Service
may find it advantageous to require filing of delinquent returns going back eight years. (See IRM 5.9.14.2.10,Case Compliance.) Pursuit of unfiled returns for periods preceding the prior six years requires managerial approval. (See IRM 5.1.11.6.1,
Enforcement Determination.)
Publication 1. If a debtor has unfiled returns, but has no current assessed tax liabilities, the Insolvency caseworker must provide him/her
1714 Letters. When a caseworker's initial review or APOC processing indicates a debtor is responsible for unfiled returns with tax potential,
the caseworker usually should send AIS Letter 1714, Request for Returns or Return Information, to the debtor with a courtesy copy to the debtor’s attorney. Caseworkers may follow local practice in sending courtesy copies
to the trustee, and may choose not to send them where the trustee has indicated they are not of assistance. While most AIS
letters do not require previous actions, a caseworker cannot generate and print AIS Letter 1714 unless a claim has been prepared
which reflects an unassessed liability. This liability will be shown on the claim as estimated condition #1, Unassessed -
No Return. Letter 1714 is generated systemically when APOC computes a claim for an unassessed pre-petition liability. The
letter is then available on AIS for printing.
Letter 1714 Follow-up. There is no need to set follow-up dates for Letters 1714 sent to individual debtors. Follow-up dates should be set for Letters
1714 sent to debtors which are corporations, partnerships or LLCs. A 15 day AIS follow-up date should be established on AIS
to coincide with the debtor's response deadline as stated in Letter 1714. (See IRM Exhibit 5.9.4-1, Inputting Follow-up Dates, for steps in setting a follow-up date.) Upon follow-up, the caseworker must review the case to verify if the requested returns
have been filed or if the debtor has provided pertinent information regarding the filing or non-filing of the delinquent returns.
Reply to Letter 1714. Responses to the 1714 letter may be written or telephonic. Written replies may contain copies of returns or original returns.
the debtor explains why filing is not required and the facts provided conflict with other case resource materials,
the debtor estimates the tax due, gives reasons the return has not been filed, and provides an estimated filing date,
No Reply to Letter 1714. In some cases, the debtor will not respond to Letter 1714. In those cases, the caseworker should consider the appropriate
next action which may include: Attendance at 341 hearing to secure the return(s);
Preparation of an IRC 6020(b) return;
Delegation Order 5-2 (Rev. 1) gives specified bankruptcy advisors and specialists the authority to prepare and execute IRC
6020(b) returns. IRM 5.1.11.6.7, IRC 6020(b) Authority, IRM 5.1.11.6.7.1, Taxpayer Contact, andIRM 5.1.11.6.7.2, Preparation and Approval of 6020(b) Returns, provide guidance and instructions on IRC 6020(b) procedures.
All actions taken to secure delinquent returns, must be documented in the AIS history.
Securing Unfiled Returns at the § 341 Hearing. For cases filed on or after October 17, 2005: 11 USC § 521(e)(2) requires the debtor to provide the trustee with a copy of the federal income tax return for the last tax
and assessed liability does not exceed the amount noted within Exhibit 5.9.13-1 criteria, no proof of claim need be prepared. The case worker will: Update the "case class"
No Claims Required Below Tolerance Criteria. If completion of the initial review reveals all required pre-petition returns are filed and the liability does not exceed
the claim tolerance criteria outlined in Exhibit 5.9.13-1, no claim is required. However, Insolvency must maintain the bankruptcy freeze on the account. The caseworker will take the
Access case on AIS. (See IRM Exhibit 5.9.11-1. , Accessing a Case on AIS. )
If a check mark appears in the "Proof Req'd"
field, click the field to remove the check mark, and click "N"
in the drop down list found to the right of the "Proof Req'd"
on the AIS tool bar.
Click the "History"
button on the tool bar to access the History Screen.
Click the "Insert"
button on the tool bar and type a history entry describing the actions taken.
on the History Screen tool bar to save the new history entry.
Delinquent Returns Not Filed. If the debtor does not respond to the Service’s request for unfiled returns and potential liabilities exist, the caseworker
the total liability of the unfiled periods exceeds the aggregate total in Exhibit 5.9.13-1,
Insolvency Responsibilities. Although the trustee can move for dismissal or conversion if tax returns remain unfiled, Field Insolvency must assume the
responsibility for filing a motion to dismiss on the grounds of non-compliance. If missing tax returns are not filed or the
debtor does not give a credible explanation as to why the debtor is not liable for those returns by the deadline given on
the 1714 letter, Insolvency caseworkers should consult Exhibit 5.9.13-1 and IRM 5.9.4.14.4, Referral Tolerances, to determine if the Service should move for dismissal or conversion. Appropriate administrative actions (see paragraph (6)
above) must be pursued, time permitting, before making a referral to Counsel for dismissal based on unfiled returns. Note:
If the aggregate (the sum total of) potential tax due is less than the amount stated in Exhibit 5.9.13-1 further resources need not be expended to refer for dismissal or conversion.
5.9.13.18.3 (09-10-2014)Federal Unemployment Tax Act Tax Claims
State Credit Adjustment.IRC § 3302 reduces the federal credit taken on a Federal Unemployment Tax Return (FUTA) return if the employer has made late
state credit adjustments to pre-petition FUTA accounts (MFT 10) that result in an additional liability to the debtor generally
Exceptions. The disallowance of claims under 502(b)(8) for the reduction of the FUTA credit for state unemployment payments only applies
to pre-petition payments of wages, salaries or commissions. If a trustee fails to make timely payment of state unemployment
fault for the failure to make a FUTA tax payment by the required date, the full state credit may be allowed to the debtor
( IRC § 3302(a)(5)).
Identifying State Adjustments. A FUTA adjustment resulting from a state's reduction of the FUTA credit can be identified on an IDRS tax mod for tax form
APOC Update. At this time APOC is not programmed to omit TC 290 assessments resulting from a reduction of a state credit on FUTA returns.
5.9.13.18.4 (03-09-2016)Duplicate and Mirror Assessments and NMF Periods
Mirror Modules (MFT 31 and MFT 65) and NMF Modules. All of a debtor’s tax liabilities accrued as of the petition date should be included on the proof of claim. This includes
MFT 31 and MFT 65 mirror modules and modules on the non master file (NMF). The claim procedures for an MFT 31 or MFT 65 mirror
or NMF module are the same as for an MFT 30 module. The caseworker must determine: If the tax liability is pre-petition or post-petition,
The correct classification of the mirror module, and The accurate claim amount.
Claim calculations for NMF modules must be computed manually. Caution:
MFT 31 is also used for restitution based assessments which are not mirrored assessments. Restitution based assessments can
be identified as using MFT 31 and having TC 971 AC 102 on the module(s). (See IRM 5.9.13.18.5 below for information on processing
restitution assessments)
Duplicate Spousal MFT 31, MFT 65, and Trust Fund Recovery Penalty (TFRP) Assessments. A proof of claim may list two MFT 31, two MFT 65, or two TFRP modules for the same period when a married couple files a joint
bankruptcy. The amounts of the assessments for the same period may be identical, or one may be larger than the other. When
AIS computes the total amount of a claim on Form B410, the sum includes the amounts of each module. The total amount computed
by AIS cannot be systemically overridden, so when both spouses have duplicate MFT 31, MFT 65, and/or TFRP assessments, the
amount of the claim on Form B410 is overstated. Caseworkers should determine whether the assessments are for the same liabilities.
If so, the claim should be filed according to local procedures in one of two ways. Note:
The Proof of Claim Statements on AIS contain several options for each procedure. The statement chosen by the caseworker may
vary depending on local practice.
The caseworker may omit one spouse’s MFT 31, MFT 65, and/or TFRP assessment(s) from the claim and provide a clarifying statement
on the proof of claim that both debtors are liable, but that only one assessment is being shown on the proof of claim to prevent
overpayment. If the assessments are in differing amounts, the caseworker should determine which assessment should be included
on the proof of claim. In most cases, this will be the higher assessment, but in some situations, the lower assessment should
be used. For example, when payments have been made on one account, but have not yet been cross-referenced to the other account,
the lower assessment should be included on the proof of claim to prevent overpayment. Example:
Proof of Claim Statement 20 is one option for providing this information. It states: "Separate assmts, one assmt is being
claimed to avoid overpayment."
There are other options available in the Proof of Claim statements on AIS.
The caseworker may include both spouses' MFT 31, MFT 65 and/or TFRP assessments and provide a suitable clarifying statement
on the proof of claim that both assessments are included, but the amount is to be paid only once. Example:
Proof of Claim Statement 30 is one option for providing this information. It states: "Separate Assmts. Both are shown, but
the amt. is to be collected once."
Because the Confirmed Plan Monitoring (CPM) screen populates systemically from the proof of claim, with this option the duplicate
assessments will both populate to the CPM screen. Caseworkers must remember to delete the duplicate assessment from the CPM
so the assessment is not being paid twice through the plan. If the assessments are in different amounts, the caseworker will
need to determine which assessment should be included on the proof of claim, as discussed above. 5.9.13.18.5 (03-09-2016)Restitution Assessments
Restitution Assessments on APOC. Restitution based assessments can be identified as using MFT 31 and having TC 971 AC 102 on the module(s). For purposes of
a bankruptcy case, a restitution assessment is classified in the same manner as the tax module to which it relates. The Automated
Proof of Claim system (APOC) will recognize the assessment and classify it based on the tax module. No flag will be raised
solely due to the fact that the assessment is for restitution.
The Judgment and Commitment (J&C) Order directs the taxpayer to pay restitution for income tax the taxpayer evaded for the
tax year 2005. The amount of restitution is assessed on September 12, 2011. On September 12, 2012, the taxpayer files a Chapter
13 bankruptcy case. The restitution assessment is not classified as priority, as the return was due more than three years
prior to the filing of the bankruptcy petition, and the restitution assessment was more than 240 days prior to the bankruptcy
petition. Because the restitution assessment does not fall within any of the reasons for classifying it as priority, APOC
will classify the restitution assessment and the related interest as general unsecured on the proof of claim.
An APOC flag will be issued if a Notice of Federal Tax Lien (NFTL) was filed for the period. If the NFTL was filed with respect
to the restitution assessment, the NFTL will carry an "R"
and the form number of the underlying tax source, such as "R1040."
The flag should be cleared in accordance with the instructions in IRM 5.9.14.2.9(5)j, Secured Period Flag.
Manual Proof of Claim Preparation. If it is necessary for a caseworker to create a proof of claim manually, caseworkers should follow the regular classification
rules for the type of tax for which restitution is to be made. Interest on the restitution assessment will have the same classification
as the tax assessment. If the failure to pay penalty accrued on the restitution assessment, it will either be secured or general
Mirror Assessments. A mirror assessment of the restitution-based assessment for the same type of tax is created based on a return filed, an assessment
made after an audit, or the creation of a 6020(b) return. The caseworker must determine: If the tax liability is pre-petition or post-petition,
The taxpayer is convicted of income tax evasion for the 2006 tax year. In the J&C Order, the court directs the taxpayer to
pay restitution of the evaded income tax in the amount of $10,000. The IRS conducts a civil exam of the taxpayer after his
conviction and determines that the deficiency for the 2006 tax year was $15,000. There will be two assessments made: the first
one for $10,000 based on the restitution order and a second, separate assessment will be made pursuant to a civil exam in
the amount of $15,000. As the above example illustrates, the proof of claim may list two modules (MFT 30 and MFT 31) for the same period when a restitution
assessment is made. The amounts of the assessments for the same period may be identical, or one may be larger than the other.
The same duplicate assessment shall be made for restitution arising from taxes other than income taxes, such as employment
taxes. Example:
If restitution is ordered against an individual defendant for failure to pay business employment taxes, the restitution is
actually based on the employment tax liability of the business, not the individual’s personal liability. Nonetheless, business
tax liability ordered as restitution can be assessed against the individual. When AIS computes the total amount of a claim on Form B410, the sum includes the amounts of each module. The total amount
computed by AIS cannot be systemically overridden, so when both the civil tax assessment and restitution assessment are on
the claim, the amount of the claim on Form B410 is overstated. The civil tax assessment should always be included on the proof
of claim. Caseworkers will need to determine whether the civil tax assessment and the restitution-based assessment are for
the same liabilities and taxpayer.
Assessments are for the same liabilities. The claim should be filed in one of two ways as listed below:• If the civil tax assessment is greater than the amount of the restitution-based assessment, then the restitution-based assessment
should be omitted, but the caseworker should provide a clarifying statement that the restitution-based assessment is omitted
to avoid overpayment.
• If the restitution-based assessment is greater than the civil tax assessment, then BOTH assessments should be included on
the proof of claim and a clarifying statement should be included to provide that both assessments are included but the amount
should only be paid once.
assessments will both populate to the CPM screen. Caseworkers must remember to delete one of the assessments from the CPM
need to determine which assessment should be included on the proof of claim and CPM, as discussed above. Assessments are NOT for the same liabilities. No clarifying statements are needed.
Any payments made towards the restitution-based assessment shall be applied towards the tax liability assessed pursuant to
the civil exam to avoid double collection of the assessment. Any payments made towards the individual defendant’s restitution-based
assessment for failure to pay business employment taxes shall be applied towards the employment tax liability assessed against
the business pursuant to the civil exam to avoid double collection of the assessment against the business. The IRS cannot
collect in full both the restitution-based assessment and the business employment tax liabilities of that separate business.
The prohibition against double collection will come into play. The caseworker must adjust the unpaid tax liability of the
corresponding business entity to account for any payments made through restitution or the restitution-based assessment against
the individual defendant. The prohibition against double collection would not apply, however, with respect to the collection
of both the individual defendant’s restitution-based assessment based on the employment tax and his personal civil tax liabilities
5.9.13.18.6 (03-09-2016)Affordable Care Act Provisions
IRC 5000A - Individual Shared Responsibility Provision. Assessment and Treatment under Bankruptcy. When applicable, the Individual Shared Responsibility Payment (SRP) liability will be assessed under MFT 35 or for mirrored
accounts, MFT 65. Even though the SRP may be thought of as a penalty, it is not treated as one when filing a proof of claim.
Rather, for bankruptcy purposes, the SRP will be treated as an excise tax under 11 USC § 507 (a)(8)(E). See IRM 5.9.13.19.3, Classifying Claims-Unsecured Priority for additional information. Note:
The SRP follows the tax year Form 1040, 1040A or 1040EZ information from which it arose. Since there is no 'tax return' on
the SRP module, the caseworker must use the Form 1040, 1040A or 1040EZ from the same year as the SRP assessment for all information
needed in order to correctly classify the liability. Including the SRP on a Proof of Claim. APOC will calculate and classify assessed balances due for the Shared Responsibility payment; however, it will NOT compute
unassessed claims or issue a flag. Caseworkers will not file estimated claims for an unassessed SRP . Caution:
If the taxpayer incurs a pre-petition SRP liability prior to the bar date it should be included on the Proof of Claim. If
the IRS discovers a pre-petition SRP after the bar date, please see IRM 5.9.13.7.1 , Late Filed Claims, or IRM 5.9.13.8, Amended Claims, for guidance.
If needed, IRM 5.9.13.20
, Claim Calculations, explains how to manually calculate an assessed SRP liability. Multiple Persons Assessed the SRP. Problems may arise with proofs of claim involving SRPs that have been assessed against both spouses under MFT 65 mirrored
Duplicate Spousal SRP Assessments. A proof of claim may list two identical SRPs when a married couple files a joint bankruptcy, and each has been assessed a
SRP for the same module(s). The assessments may either be in the same or differing amounts. When AIS computes the total amount
of a claim on Form B410, the sum equals the amounts of each module. That total amount computed by AIS cannot be systemically
overridden, so when both spouses have duplicate SRP assessments, the amount of the claim on Form B410 is overstated. Caseworkers
should follow the procedures outlined in IRM 5.9.13.18.4,Duplicate and Mirror Assessments and NMF Periods, choosing the appropriate option based on local procedures.
shared responsibility payment assessments are for the same underlying liability (jointly filed Form 1040), and are not for
separately filed Forms 1040.
Collection of Proper Amount. The IRS must not over-collect. The Service’s policy is to collect the unpaid SRP only once.
Post-Petition SRP assessments in Chapter 13. An 11 USC § 1305 claim may be filed for taxes that become payable while the case is pending. This includes any amounts due
for the SRP . If the Form 1040, 1040A or 1040EZ is a post-petition module (see IRM 5.9.10.9(1), Post-Petition Tax Liabilities), the SRP is also post-petition.
ACA Provision Section 9008 - Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers (Branded Prescription
Drug Fee or BPD Fee)
General Information. The Annual Fee on Branded Prescription Pharmaceutical Manufacturers and Importers (Branded Prescription Drug Fee or BPD Fee),
imposes an annual fee on manufacturers and importers of branded prescription drugs (BPDs) with gross sales to specified government
programs exceeding $5 million. See IRM 25.21.1, Branded Prescription Drug Fee for further information. Note:
An entity that owes a BPD fee may be a debtor in a bankruptcy case.
Assessment and Treatment under Bankruptcy.When applicable, the Branded Prescription Drug (BPD) liability will be assessed under MFT 03, however it will have a period
ending in 08 to distinguish it from all other assessments under the same MFT. For bankruptcy purposes, it will be treated
as an excise tax under USC § 507 (a)(8)(E). See IRM 5.9.13.19.3Classifying Claims-Unsecured Priority, for additional information. Note:
Since no return is required to report the BPD fee, the BPD fee is considered to be incurred in the year that is two years
before the fee year, at the time the entity sales to the Government programs exceed $5 million. The bankruptcy three-year
priority period would begin when the tax is incurred. Including the BPD on a Proof of Claim. APOC will not calculate and/or classify assessed balances due for the BPD. Caseworkers will be required to calculate and
classify the period manually. APOC will not compute unassessed claims or issue a flag for unassessed periods; however, caseworkers
should file estimated claims for an unassessed BPD, where necessary. If the sales were made in the year in which the petition
was filed, the portion of the fee based on pre-petition sales would be a pre-petition claim, and the portion based on post-petition
sales would be a post-petition administrative expense. The pre-petition portion could be estimated based on the ratio of pre-petition
sales to total sales by the taxpayer for that year. In order to prepare an accurate estimate and file a protective claim,
the caseworker would have to request the amount of pre-petition sales from the debtor, since the debtor is the only entity
that may have that information. If that information can not be obtained, the Service could either file a protective claim
based on the information it has from the last year that it has data for (noting that it’s an estimate), or refer the case
to Counsel for a BR 2004 exam/request. Note:
Since the treatment of the BPD fee presents novel legal issues, Insolvency should work with Local Counsel in any bankruptcy
case where the debtor owes, or may owe, the BPD fee. 5.9.13.19 (09-10-2014)Classifying Claims
Claim Steps. Although the APOC system prepares most claims, Insolvency caseworkers must understand the steps in classifying claims and
calculating dollar amounts. Amended claims or APOC flags may require manual computations by assigned caseworkers. This involves
separately identifying tax, interest on tax, penalty and interest on penalty. Locally designed worksheets may be used to record
these computations before inputting them into the AIS proof of claim database or the APOC claim record. The steps for preparing
a proof of claim are listed below and in the following subsections. Identification of claimable liability.
Printing the claim (in courts without the Electronic Proof of Claim system (EPOC)).
Signing the claim (in courts without EPOC).
Mailing the claim or transmitting it electronically through the EPOC system.
Claimable Liability. The date of the bankruptcy petition and dates of the taxable period determine if a liability is pre-petition or post-petition and if the Service should include it on its proof of claim. Liability
Regardless of whether taxes are assessed, all tax liabilities incurred before the petition date are determined to be pre-petition periods and, if above the aggregate criteria noted within Exhibit 5.9.13-1, should be included on a proof of claim.NOTE: The due date of a return does not determine if a claim is classified as pre-petition.
All tax liabilities incurred after the petition date, whether or not assessed, are considered post-petition. Administrative claims and § 1305 claims may be
filed by the Service during the pendency of a bankruptcy.
An income tax liability (both IMF/BMF) arises at the end of the taxable period. However, returns for certain taxes, such as
employment taxes, may be split between pre-petition and post-petition periods on a proof of claim where the bankruptcy petition
Divisible Taxes
Some BMF returns are filed on a quarterly basis, such as Form 941. If at least one period or quarter of the same tax year
is on the original, timely-filed proof of claim, then additional periods or quarters of the same year may be added in an amended
Although many courts allow additional taxes of the same type as on the original, timely-filed claim to be claimed in an amended
claim on the grounds that the claims are the same or similar, some courts may disallow the amended claim as an untimely claim
for a different tax period on the grounds that the claims are not sufficiently similar. (See IRM 5.9.13.8(3) , Amendments after Bar Date.)
IRC § 1398 Election of "Short Year"
See IRM 5.9.13.18(2)(c),Corporate Income Tax "Split "
Liability Pre-BAPCPA, and IRM 5.9.13.18(2)(d), BAPCPA Provision.
5.9.13.19.1 (09-10-2013)Determining Debt Type
Three Categories. The three basic types of debt are secured, priority, and unsecured general. Tax debts on a proof of claim are designated as being within one of these three categories. A claim is secured when a valid
NFTL was filed prior to the bankruptcy and there is equity to secure the lien, or there is an amount subject to setoff. A
priority claim is not secured, but is entitled to priority treatment in the bankruptcy case before certain other creditors
according to the payment schemes set out in the Bankruptcy Code. An unsecured general claim is not secured and is not entitled
to priority treatment. Absent APOC, the caseworker must determine if the debt is to be claimed as secured, unsecured priority,
or unsecured general. Balances due on a module may be split among these categories on a proof of claim.
Counsel Guidance. If the claim classification of a tax liability cannot be easily determined, Counsel can offer advice. Exceptions and special
circumstances may govern how taxes are classified from one judicial district to another.
5.9.13.19.2 (05-05-2015)Secured Claim
Secured. The Service may assert a secured claim for taxes, penalties, and interest under IRC § 6321. A tax debt is secured by an NFTL
or by setoff.
Notice of Federal Tax Lien. A valid pre-petition NFTL attaches to debtor’s property, whether real or personal, and includes exempt/abandoned property
listed in the debtor’s schedules filed with the court. Note:
The proper place(s) for the NFTL to be filed to reach the debtor's real and personal property is discussed in IRM 5.12.7.10,
Filing, and IRM 5.17.2.3.2, Place of Filing. In some jurisdictions, the NFTL must also be indexed before it is considered filed. This is discussed in IRM 5.17.2.3.1,Purpose and Effect of Filing Notice, and the State Law Guides on the My SBSE website. Discussions of the property to which the federal tax lien attaches and
determining the priority of the federal tax lien can be found in IRM 5.17.2, Federal Tax Liens.
The IRS’s secured status is limited to the debtor’s equity under 11 USC § 506(a). Property excluded from the bankruptcy estate
under § 541(c)(2), such as a pension plan that contains an enforceable anti-alienation clause under nonbankruptcy law, cannot
be included in determining the amount of the Service’s secured claim. Questions regarding particular retirement plans should
be addressed to Counsel. Note:
Under 11 USC § 506(a)(2) for Chapter 7 or 13 individual bankruptcies filed on or after October 17, 2005, the value of personal
for costs of sale or marketing. Tenancy by the Entirety. The Supreme Court has ruled state law cannot preclude the attachment of a federal tax lien to property held as tenancy by
the entirety in states permitting this form of ownership. When determining the value of the Service's secured interest on
a proof of claim when only one spouse has filed bankruptcy, 50% of the equity in property held as tenancy by the entirety
generally can be used.
Secured Setoffs. A pre-petition setoff exists when the IRS holds a pre-petition credit for a debtor who owes the IRS a pre-petition debt.
The POC is secured to the extent of the amount subject to setoff. Both the credit due to the debtor and the debit due to the
IRS are considered mutual debts. The Bankruptcy Code preserves the right of setoff of mutual debts (11 USC § 553). It is not
necessary for the Service to have filed a NFTL to be secured for the amount of the setoff.
Setoffs under BAPCPA. For cases filed on or after October 17, 2005, 11 USC § 362(b)(26) allows the Service to setoff a pre-petition income tax refund to a pre-petition income tax liability without a lift of the automatic stay. This section applies to pre-petition income taxes only. It does not apply
to: Non-income taxes such as Form 941 employment taxes or TFRP assessments.
Pre- to post-setoffs.
Post - to pre-setoffs.
Post- to post- setoffs.
The Service's Chapter 13 claim is for $10,000 in priority tax, $2,000 in unsecured general tax with $4,000 on penalties and
interest on penalties. The debtor files a pre-petition return resulting in a $5,000 refund credit. The $4,000 of penalty and
interest on penalty plus $1,000 of the unsecured general period can be secured by the refund credit.
Oversecured. When equity in a debtor’s property exceeds the amount of the IRS claim, the IRS is fully secured (oversecured) and is entitled to post-petition interest. (See 11 USC
§ 506(b).) For cases filed on or after October 17, 2005, the interest rate equals the statutory IRS rate effective during
the calendar month of confirmation. In cases where the Service is entitled to post-petition interest, the Insolvency specialist
must annotate the AIS plan screen accordingly. Undersecured. If the IRS is undersecured, the claim amount not covered by equity in the debtor’s property may be reclassified as a priority
claim if it qualifies. Otherwise, it must be relegated to unsecured general claim status.
Unsecured. Tax debts that cannot be secured by a pre-petition NFTL attaching to equity in assets or those debts that cannot be secured
Unable to Determine Value of Secured Claim. On rare occasions, caseworkers may not be able to determine the equity in the debtor's property, either because it is not
possible to determine the extent of the property owned by the debtor, or the value of the property cannot be estimated. In
these situations, it may be necessary to file the claim showing the periods for which NFTLs have been filed as fully secured
until a determination of the debtor's property is made by the bankruptcy court. Caseworkers should consult Area Counsel in
these situations. For the IRS to preserve its rights to claim any unsecured portion of its claim as either priority or unsecured general, caseworkers
should add a statement to the proof of claim. Proof of claim statements 90 and 91 can be used for this purpose. This statement
will provide: "If any portion of the secured claim is unsecured, the IRS claims this portion as priority and/or unsecured
general, as appropriate."
Proof of claim statements 90 and 91 can be selected from the Claim Statement drop down menu on the Proof of Claim screen on
AIS. Both statements must be selected for the entire statement to print on the proof of claim.
Once an equity determination is made, if an amended proof of claim is filed showing the correct amount of the secured claim
and reclassifying the remainder as priority and/or unsecured general, proof of claim statements 90 and 91 should be removed.
Creditor's Option. The existence of a valid NFTL does not obligate the Service to file a secured claim if the government's interest can best
Converted Cases. It is not uncommon for a case to convert from one chapter to another, and caseworkers frequently review converted cases to
see if an amended claim is needed. Regardless of the status of the NFTL at the time of the review of the converted case, caseworkers
should continue to treat a claim as secured when IRS was secured on the petition date.
5.9.13.19.3 (03-09-2016)Unsecured Priority
Priority Classification. USC 11 § 507(a)(8) defines pre-petition taxes entitled to priority status. See the following table. 11 USC §
Income tax for a return due, including extensions (TC) 460, after three years before the filing of a petition . ("Three Year
Income tax assessed within 240 days before the petition date. ("240 Day Rule"
):•Pre-BAPCPA: The 240 day period is suspended when an offer in compromise (OIC) is pending for any time after the assessment is made. To
compute the 240 day period, do not include the time period in which the OIC is pending. Add 30 days to the 240 day period
when an OIC was pending within the 240 days. An OIC is pending when it is accepted for processing. This date will be reflected
by a TC 480. An OIC ceases to be pending when the OIC is returned, rejected, withdrawn, or accepted. • BAPCPA: The 240 day period is suspended when an OIC is pending or is in effect. To compute the 240 day period, do not include the
time period in which the OIC is pending or in effect. Add 30 days to the 240 day period when an OIC is pending or is in effect
within the 240 days. An OIC is pending as outlined above. An OIC is in effect once it has been accepted. It remains in effect
until the offer is defaulted, or the compromised amount is paid in full and the future compliance period has ended. Acceptance of an OIC is shown on IDRS by the existence of a TC 780. The completion of the OIC, including the future compliance
period, is reflected by the existence of a TC 788. If the taxpayer defaults on the OIC before completion, this will be shown
by the existence of a TC 781. If TC 788 is not shown on the module(s), and the OIC has not been defaulted, it is still in
Income tax not yet assessed but is assessable because the ASED is still open due to an audit or other extension of the ASED.
Exception: Fraud by the debtor, unfiled returns and returns filed late (within two years of the petition date), do not fall within the
category of assessable, but not yet assessed liability. These taxes will be unsecured general. However, if the ASED is open
because of fraud committed by the debtor's spouse on a joint return, or by a return preparer, and the debtor was not involved
in the fraud, the tax will be priority. 507(a)(8)(C)
Trust fund tax including withheld FICA and employment taxes, the Trust Fund Recovery Penalty (IRC § 6672) and collected excise
Employment taxes, for a return due within three years prior to the petition date. 507(a)(8)(E)
Excise taxes, for a return due within three years prior to the petition date. Exception:
Assessments arising under IRC § 4971 for failure to meet minimum funding standards of a pension plan are considered a "tax"
in the IRC. However, the Supreme Court has ruled that the liability assessed under IRC § 4971 is a penalty. For USBC proof
of claim classification purposes, unsecured IRC § 4971 liabilities are general unsecured claims. IRC § 4971 liabilities may
be a secured priority claim when the liability is secured by a NFTL or right of setoff. See U.S. versus Reorganized CF&I Fabricators
of Utah, Inc., 518 U.S. 213 (1996).
Claims arising from erroneous refunds or credits have the same priority as the claim for tax to which they relate.
Accrued pre-petition interest on tax is given the same classification status as the underlying tax.
The Concept of Tolling. Tolling interrupts the running of a statute of limitations in certain situations. Tolling can occur due to statutory provisions
providing for tolling or equitable tolling created by the courts. In bankruptcy cases, tolling applies to the periods used
to determine priority and dischargeability of taxes. Tolling in bankruptcy occurs as a result of Bankruptcy Code provisions
and Supreme Court decision in the case of Young v. United States, 535 U.S. 43, 122 S. Ct. 1036 (2002). Pre-BAPCPA Tolling. The Supreme Court confirmed the three-year lookback period of 11 USC § 507(a)(8)(A)(i) is a limitations period subject to
traditional notions of equitable tolling with their decision in Young v. US, 535 US 43, 122 S. Ct. 1036 (2002). In light of the rationale used by the Court in Young, the Service no longer takes the position that it is entitled to an additional six months based upon IRC § 6503(h). BAPCPA Tolling. For cases filed on or after October 17, 2005, BAPCPA tolls the "look back"
priority periods in 11 USC § 507(a)(8):
While the automatic stay is in effect in a prior bankruptcy case.
During a Collection Due Process (CDP) hearing for a proposed levy action and any related appeals.
While collection is precluded because of the existence of a confirmed plan in a prior bankruptcy case.
The Service's position is that an additional 90 days is added to each situation noted above. Tolling suspends all the "look
priority periods in 11 USC § 507(a)(8), including:
Income taxes due within 3 years.
Income taxes assessed within 240 days, including extensions of the 240 day period during which an offer in compromise is pending
or in effect.
Employment taxes due within 3 years.
Excise taxes due within 3 years.
An assessment for tax year 2003 is made against the taxpayer on January 10, 2008. The taxpayer submits an offer-in-compromise
which becomes pending on February 10, 2008, and is rejected on February 15, 2009. On March 10, 2009, the taxpayer files a
Chapter 13 bankruptcy, which is dismissed on March 10, 2011. On April 10, 2011, the taxpayer files a Chapter 7 bankruptcy.
At the time the taxpayer filed the first bankruptcy, only 31 days of the 240-day lookback period had run (January 10, 2008
to February 10, 2008), because the 240-day period had stopped running when the offer was submitted for the time the offer
was pending, plus up to 30 days after rejection. The 240-day period continued to be tolled while the automatic stay was in
effect in the first bankruptcy, plus up to 90 days thereafter. The second bankruptcy was filed while the 240-day period was
still tolled by the first bankruptcy. When the second bankruptcy was filed, therefore, only 31 days of the 240-day period
had run, and the claim for the 2003 liability should be classified as priority. Note:
Since applicable law provides that the 240-day period is tolled while an OIC is pending, plus 30 days, and during a prior
bankruptcy, plus 90 days, the running of the 240-day period in this example continued to be tolled (i) between the time the
OIC was rejected and the filing of the first bankruptcy, and (ii) between the dismissal of the first bankruptcy and the filing
of the second bankruptcy. When add-on periods overlap with a later tolling event, the overlapping period cannot be counted
twice when determining the number of days for which tolling applied.
5.9.13.19.4 (09-10-2014)Unsecured General
Unsecured General Claims. The term "unsecured general"
does not appear in the Bankruptcy Code. Liabilities classified as unsecured general claims do not fall into either secured
or priority status. These include all penalties where the IRS did not suffer an actual loss (also referred to as "non-pecuniary
penalties) and any interest associated with that penalty. The following chart can aid in determining claim status. STEP
• reviewing for NFTL• reviewing for setoff of pre-petition credit
reviewing 11 USC § 507(a)
Failure to Pay Penalties. IRM 5.9.4.13, Failure to Pay Tax Penalty and Failure to Pay Estimated Income Tax Penalty, discusses when failure to pay penalties are included on a proof of claim for pre-petition tax liabilities.
5.9.13.20 (03-09-2016)Claim Calculations
Tax, Penalty, and Interest. Absent APOC, the caseworker can calculate the tax, penalty and interest for the claim using IDRS command codes: INTSTB
ACT/DMI is a new program which also computes interest, and is preferred for more complex interest computations, as discussed
in IRM 20.2.6.4, Interest Computation Tools. Information on ACT/DMI and information on how to obtain the software is located at http://sbseservicewide.web.irs.gov/interest/act/default.aspx
INTSTB. Command code INTSTB shows the tax, the assessed failure to pay penalty (FTP), the assessed interest, and assessed penalties
other than FTP. These amounts comprise the "Assessed Total."
(assessed total and accrued total). (See the discussion in the Using INTSTB in Preparing Proof of Claim job aid.)
COMPA and COMPAF. If INTSTB is not available, command codes COMPA and COMPAF are used to calculate interest and failure to pay (FTP) penalty.
Refer to the tables in IRM 5.9.13.20 below when performing specific calculations using COMPA. Refer to IRM 2.3.29,Command Codes INTST, ICOMP and COMPA for further guidance on using COMPA and COMPAF. Manual Calculations. Claim calculations are based on the classification of each tax assessment on each tax module. If there is more than one tax
assessment on a single tax module, in order to appropriately claim the amounts owed, the caseworker must calculate each assessment
separately. Claims not fully secured by a debtor's equity require additional steps. Also, employment tax returns which are
not treated as priority under the three-year lookback rule will require additional steps in order to correctly calculate the
trust fund and non-trust fund taxes separately. The trust fund portion of the tax and any accrued interest will be classified
as priority, while the remainder of the employment taxes will be classified as unsecured general. (See IRM 5.9.13.19.3, Unsecured Priority and IRM 5.9.13.20(5), Alternative Manual Calculations.)
Secured and Unsecured General Claims. The steps to calculate tax, penalty and interest in a fully secured claim and an unsecured general claim are identical. The
following table demonstrates the calculation of a basic secured or unsecured general claim. STEP
Using TXMOD, locate the appropriate tax assessment (ex: TC 150, 290 or 240 RC618) and subtract pre-petition adjustments to
Total assessed tax to be used in calculating claim. Caution:
Unagreed deficiency assessments on pre-petition periods which are assessed post-petition are violations of IRC § 6213(f) if
the period to petition the Tax Court did not expire before the bankruptcy petition was filed. In these cases, the assessment
must be reversed. The amount should be included on the proof of claim as an unassessed priority or unsecured general claim.
Total all unreversed pre-petition payments.
Subtract the total in step 2 payments from the total in step 1 tax.
If pre-petition payments satisfy tax liability and credits still exist, subtract the remaining step 2 payments from penalties
until they are zeroed out, then subtract any remaining payments from interest.
Tax due is computed. This is the amount of tax that will be listed on the claim. Note:
INTSTB, can be used to replace steps 1, 2, and 3.
Using INTSTB, add TAX & ASSESSED OTHER PENALTY amounts to TOTAL FTP.
Penalty only computed. This is the amount of penalty that will be listed on the claim.
Interest computed. This is the amount of interest that will be listed on the claim.
Priority Claims. The following table demonstrates the calculation of a basic priority claim.
Unless otherwise secured by a NFTL, the penalty will be classified as unsecured general. Therefore, it is necessary to separately
calculate the amount of interest attributable to the tax and the amount of interest attributable to the penalty.
Subtract the total payments from step 2 from the total tax from step 1. Note:
Tax due is computed. This is the amount that will be listed as tax on the claim.
Input CC COMPA from due date of return to petition date on amount of tax (from step 3). Refer to IRM 2.3.29, Command Codes INTST, ICOMP and COMPA.
For TXMODs where payments have posted after the return due date, a new COMPA is required each time the balance of tax changes. The determination of interest on tax may require multiple COMPA calculations,
starting from the return due date and ending on the petition date, with interim payment dates in the "from"
Interest on tax is computed. This amount will be listed as the interest amount on the claim.
Interest on penalties is computed. This type of interest is always classified as an unsecured general claim. 8
Add interest on penalties (from Step 7) to the penalty amount (from Step 5). This is the amount of penalties and interest on penalties. It will be listed as penalty on the claim.
Verification of calculations can be obtained by adding Steps 3, 5, 6 and 7, which should equal the balance due on INTSTB.
Alternative Manual Calculations. There may be situations in which it would be appropriate to calculate tax, penalty and interest manually ( i.e. multiple
unpaid tax assessments on the tax module, or modules with trust fund tax that is required to be listed as a priority claim).
Tax. The following chart shows the basic steps to calculate tax.
or credit amounts.Note: The tax balance amount should equal the amount shown as tax on INTSTB.
Penalty. The following chart shows the basic steps to calculate penalty.
or debits and abatements or credits. Example: For failure to pay penalty (FTP), TC 276, related transaction codes are 270 manual assessment of FTP, 271 manual abatement
A pre-petition non-pecuniary loss penalty will never be classified as priority. It will be classified as unsecured general
if it is not secured. Interest. The following chart shows the basic steps to calculate interest.
Add the accrued interest from INTSTB to the total interest computed from IMFOLT/BMFOLT/TXMODA.
Pre-petition interest on penalty from a priority claim is classified as unsecured general, the same as the penalty.
The following table demonstrates the steps for separately computing interest on tax and interest on penalty. STEP
Compute the interest on tax using CC COMPA. The interest on penalty is computed after the interest on tax is determined. Reminder: Where payments are received after the return due date, a new COMPA is required each time the balance of tax changes. The
Manually Calculating the TFRP and Individual Shared Responsibility Payment (SRP) Assessments. Since these assessments are made as penalties on IDRS, but treated as Tax amounts for the purposes of bankruptcy claim filings,
standard claim calculation methods can not be used. Pull TXMOD & INTSTB on each applicable assessment and follow the instructions
TFRP assessments.1. Set Tax on claim = Assessed Other Penalty + Tax (from INTSTB) 2. Set Penalty on the claim = 0 3. Set Interest on the claim = Total INT (from INTSTB)
If the calculated Tax amount from step 1 above is <=0 then set Tax on claim = zero and set the Interest on the claim = Bal
Due (from INTSTB).
If there is an unpaid TC 360 present on TXMOD, the caseworker will subtract the amount of the TC 360 from Tax and add to penalty
for claim amounts. SRP assessments.1. Set Tax on the claim = Assessed Other Penalty + Tax (from INTSTB) 2. Set Penalty on the claim = 0 3. Set Interest on the claim = Total INT (from INTSTB) Caution:
If the calculated Tax amount from step 1 above is <=0 then set Tax on the claim = zero and set the Interest on the claim
= Bal Due (from INTSTB).
Under section 6601(e)(2), the Service may not charge interest on an assessable penalty, additional amount or addition to tax
(except for the failure-to-file penalty, failure to pay stamp tax, and accuracy-related and fraud penalties) if the taxpayer
pays the penalty within 21 calendar days (10 business days if the amount of the penalty is $100,000 or more) after the first
notice and demand. If the taxpayer does not pay the penalty in full, interest will accrue from the notice date. Therefore,
interest is applicable on any SRP where the Petition Date > the date of Notice and Demand for payment and the assessment has
gone unpaid for more than 21 days. If interest is applicable, and the interest on INTSTB is zero, use command code COMPA to
compute an interest amount.
5.9.13.21 (09-10-2013)AIS Claim Screen
Loading Claim Information to AIS. Once the liability calculations are determined, the information is input to AIS through the Proof of Claim screen, usually
from a POC worksheet the caseworker has prepared. Caseworkers should consult the AIS User's Guide for instructions on how
to load a claim or an amended claim.
Identification of Right of Setoff. Where Insolvency personnel have the right under 11 USC § 362(b)(26) (effective October 17, 2005, pursuant to BAPCPA) to complete
fill-in field on the Proof of Claim screen.
Language for Insertion on Claim. When the dollar amount of the setoff has been input to the Proof of Claim screen "Offset"
field, the setoff amount is automatically filled in next to the "$"
sign and the following language will appear on the claim:"The United States has the right of setoff or counterclaim(s), in the amount of $____________. The identification of any sums
and will be asserted to the extent lawful."
5.9.13.22 (09-10-2013)Printing Claims
Printing Proofs of Claim. The Generate POC section of the Proof of Claim Tab on AIS provides several options for viewing and/or printing a proof of
"Draft "
prints a copy of the current claim, including a watermark. This option does not change the "Original Prepared"
or "Amended Prepared"
dates, or update the "Amendment"
number. It does not update the "Proof Req'd"
"Official Filing Copy"
prints a claim for filing and updates either the "Original Prepared"
date. It also updates the "Proof Req'd"
field. It is not intended to produce copies of a claim because it updates the "Prepared"
fields with a new date. Use of this option should be limited to generating, printing and mailing the current claim to the court for filing.
Use of this option should be rare due to the widespread use of EPOC for filing claims.
"Reference Copy"
prints a copy of the current claim, without a watermark. It does not update the "Original Prepared"
fields or update the "Proof Req'd"
field. If caseworkers need a copy of the current claim to send to Area Counsel, the trustee or other parties, they should use this
option to produce a copy.
"Previously Filed Claims"
accesses any previous versions of the claim that were filed within the last 90 days. Claims can be viewed and/or printed.
This option does not update any fields on AIS.
5.9.13.23 (09-10-2014)Allowable Claims
Establishing Claim Validity. Upon filing a proof of claim, the government becomes a party in interest in the bankruptcy. A properly filed proof of claim
is deemed allowed unless objected to by a party in interest (11 USC § 502(a)). Officers and employees of the Service may be
required to appear as witnesses or to produce evidence in court to establish the validity of the IRS’s proof of claim. Note:
The caseworker does not need to obtain an express authorization from the Commissioner of Internal Revenue so long as the caseworker
is appearing and producing evidence at the request of the attorney representing the Service for the purpose of establishing
the rights of the government.
Providing Transcripts to Debtors and Trustees. Bankruptcy Rule 3001 provides that if a claim includes pre-petition interest, fees or other expenses, an itemized statement
of the amounts must be filed with the claim. The IRS' form B410 attachment should satisfy this requirement. However, if the
debtor, debtor's representative or the trustee request such a statement for the liabilities shown on a proof of claim, caseworkers
should provide a transcript of all outstanding pre-petition liabilities as soon as possible. The caseworker should document
the AIS history with the date the request was made, the information given to the debtor, debtor's representative or trustee,
and the date the information was given. Note:
If the person requesting the information is not the debtor, information should only be provided to the person if disclosure
is authorized. Consult IRM 5.9.19-1, Disclosure Chart, for guidance on disclosure to third parties.
Authorization. Bankruptcy Rule 3001(b) provides the proof of claim must be executed by the creditor or the creditor’s authorized agent.
Requests to Buy IRS Claims. As a matter of policy, the IRS will not entertain offers from a third party to purchase the Service's proofs of claim.
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