Prior Provisions. A prior analysis for Title 14, Coast Guard, consisted of items for part I “Regular Coast Guard” beginning with section 1, part II “Coast Guard Reserve and Auxiliary” beginning with section , and part III “Coast Guard Authorizations and Reports to Congress” beginning with section , prior to repeal by Pub. L. –, title I, § , Dec. 4, , Stat. 7 Section states that bankruptcy courts cannot determine tax liabilities (1) if the amount has already been determined by competent tribunal before the start of the case under Title 11, (2) the estate’s right to a tax refund before a specified time period, or (3) if the determination is connected to certain ad valorem taxes. 11 U.S.C. A, title V, §(b), Dec. 28, , Stat. , provided that: "The amendments made by subsection (a) [amending this section] shall apply with respect to members separated under section or of title 10, United States Code, on or after date of the enactment of this Act [Dec. 28, ].".
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All bankruptcy cases are handled in federal courts under rules outlined in the U. Bankruptcy Code. There are different types of bankruptcies, which are usually referred to by their chapter in the U. Bankruptcy Basics provides detailed information about filing. The rules of procedure that govern how Bankruptcy Courts operate are called the Federal Rules of Bankruptcy Procedure.
Return Filing Requirements. Determination of Tax Liability. This includes: Any tax, Any fine or penalty relating to a tax, and Any addition to tax. Huckabee Auto Co. When an individual debtor's post-petition tax liabilities cannot be claimed in a bankruptcy case, or When an individual debtor's post-petition tax liabilities have not been claimed in a bankruptcy case.
Note: This date may be extended by order of the court. Exceptions to Discharge. Trust fund taxes Taxes with respect to unfiled returns Late returns filed within two years of the petition date Fraudulent returns Those taxes that the debtor made a willful attempt to evade or defeat. Property of the Estate. Proceeds, rents, or profits of estate property are also estate property.
Turnover to the Trustee — Assets Seized Pre-petition. Exempt Property. Only individuals can claim exempt property. To qualify as a preference, a tax payment must: Be made while the taxpayer was insolvent; Be made on or within 90 days before the petition date; Be a payment outside the normal course of business and not made according to ordinary business terms; Be for an amount that is more than the creditor would have received in a Chapter 7 liquidation; and Be a payment on account of an antecedent debt e.
For additional information on the automatic stay, collection statute suspension, and assessment statute in a bankruptcy case, see: IRM 5. Exhibit 5. Glossary of Common Bankruptcy Terms.
The bankruptcy court may permit the trustee to abandon any property of the estate that is burdensome or of inconsequential value to the estate. Abandonment to avoid adverse tax consequences when the property is sold is an issue when the debtor is an individual in Chapter 7 or Chapter Affirmative Act: The trustee may actively abandon or a party in interest may request abandonment. Notice and a hearing is required, although notice can be general, and a hearing is not always held.
Administrative Abandonment: If the property is listed in the schedules, but it is not administered by the trustee i. Adequate Protection A secured creditor is allowed to have its secured interest "adequately protected" while the automatic stay is in effect.
This arises when the property is depreciating or, in some cases, when the accrued interest on a defaulted loan is diminishing the equity in the property. The court may award the creditor some protection against the loss of value rather than modifying the automatic stay. Adequate protection most commonly consists of periodic cash payments and replacement liens in post-petition assets. Other provisions can also be included to protect the collateral; such as, a requirement that the debtor maintain insurance on the property.
Administrative Expense The actual, necessary expenses of preserving the estate, including any tax incurred by the estate. This includes tax liabilities for periods ending post-petition and before discharge or dismissal for which the estate is liable.
Adversary Proceeding A lawsuit within the bankruptcy case in which one party files a complaint to seek relief for example; to recover money or property, to determine the validity of a lien, to determine dischargeability of a debt, or to obtain an injunction. Adversary proceedings involve more legal formalities than contested matters.
Rule of the Federal Rules of Bankruptcy Procedure determines when an adversary proceeding must be filed. The bankruptcy database maintained by Insolvency.
Asset Case All Chapter 9, 11, 12, and 13 cases are considered asset cases. A Chapter 7 case may be an asset case or a no asset case. A Chapter 7 case in which the debtor has assets which are non-exempt i.
If the debtor in a Chapter 7 case has only exempt or excluded assets; such as, a personal home or a retirement plan, which are not available to pay claims, the case is considered a no asset case. Note: Creditors may ask the court for relief from the automatic stay to permit them to pursue collection remedies; such as, a foreclosure action on real property or to offset a tax refund.
Page Last Reviewed or Updated: Apr Revised title and expanded subsections to include IRM internal controls information. Revised time frame for general bar date. Affordable Care Act. Centralized Insolvency Operation. Debtor in Possession. Employer Shared Responsibility Payment.
Field Insolvency. Notice of Federal Tax Lien. A secured creditor is allowed to have its secured interest "adequately protected" while the automatic stay is in effect. The actual, necessary expenses of preserving the estate, including any tax incurred by the estate. A lawsuit within the bankruptcy case in which one party files a complaint to seek relief for example; to recover money or property, to determine the validity of a lien, to determine dischargeability of a debt, or to obtain an injunction.
All Chapter 9, 11, 12, and 13 cases are considered asset cases. The term bankruptcy is usually used in connection with the federal bankruptcy laws enacted by Congress. While "bankruptcy" generally refers to a proceeding brought in the federal bankruptcy courts governed by the Bankruptcy Code, the terms insolvency proceeding and receivership usually refer to proceedings brought under state laws and supervised by the state courts.
A bankruptcy can either be voluntary or involuntary. Such provisions severely limit the imposition of the automatic stay in cases of serial filings, require tax compliance from individual debtors, and establish a means test for Chapter 7 debtors. A division of a United States District Court. All District Courts have standing orders referring bankruptcy cases to bankruptcy judges. The form filed by the debtor or against the debtor by creditors in an involuntary bankruptcy with the bankruptcy court requesting relief from creditors.
It is filed to commence a case under any chapter of the Bankruptcy Code. Signed into law and effective for all bankruptcy cases filed on or after October 22, It made changes to the bankruptcy law; such as, permitting assessments and the issuance of notice and demand without violating the automatic stay and the filing of late proofs of claim for priority taxes in Chapter 7 cases.
Rules of procedure that govern the practice and procedure in bankruptcy cases. The official name for these rules is the "Federal Rules of Bankruptcy Procedure. The date fixed by the court, or by statute, as the date by which a creditor must file a proof of claim. The Service is allowed a minimum of days after the order of relief in which to file a proof of claim. The court may grant extensions for cause. The official record of the bankruptcy case.
It shows every event occurring in and every document filed in the case. Cash collateral includes accounts receivable.
Change of location of the bankruptcy filing; usually due to the debtor relocating from one part of the country to another. A bankruptcy proceeding for a governmental unit. In order to qualify as a debtor under Chapter 9, an entity must, among other things, be a municipality, be authorized to be a debtor by state law, be insolvent or unable to meet its debts as they mature, and desire to effect a plan to adjust such debts.
A reorganization proceeding filed under Chapter 11 of the Bankruptcy Code by an individual, business, or other entity where creditors are paid under a plan. A plan can last several years; however, a large percentage eventually fail. Individual debtors may receive a discharge upon completion of the Chapter 11 plan or a hardship discharge.
This chapter applies to family farmers and fishermen. It closely resembles a Chapter 13; but, without a super discharge. Creditors are paid under a plan. Payments may be paid seasonally. Debtors may receive a discharge upon completion of the Chapter 12 plan or a hardship discharge. This chapter applies to individuals with regular income, sole proprietors, and other self-employed individuals. Chapter 13 is a reorganization proceeding for individuals with regular income, including wage earners, where creditors are paid under a plan.
Plan payments are paid through a trustee who handles all disbursements. There are debt limitations to qualify for a Chapter The debtor may receive a discharge upon completion of the Chapter 13 plan or a hardship discharge.
This chapter applies when: 1 A foreign court or a foreign representative seeks assistance in the United States in connection with a foreign proceeding; 2 Assistance is requested in a foreign country in connection with a case under 11 USC; 3 A foreign proceeding and a domestic bankruptcy for the same debtor are pending concurrently; or 4 Creditors or other interested persons in a foreign country have an interest in requesting the commencement of, or participating in, a case or proceeding under 11 USC.
A right to payment even if unliquidated, contingent, or disputed. Proofs of claim may include tax liabilities which have not been assessed. See also Proof of Claim. Under the Bankruptcy Code, the co-debtor stay applies only to consumer debts in Chapters 12 and 13 cases. It does not apply to taxes. See Consumer Debt. A pleading filed by a party to the bankruptcy case to initiate an adversary proceeding.
The complaint must be served with a summons. Applicable only in bankruptcies filed under Chapters 11, 12, and A debt incurred by an individual primarily for personal, family, or household purposes.
Does not include taxes. See Co-Debtor Stay. When a debtor voluntarily or involuntarily changes from one chapter of bankruptcy to another chapter with the approval of the bankruptcy court. As long as at least one class of creditors approves the plan, the plan does not discriminate unfairly. The person or entity corporation, partnership, municipality, etc. The debtor in a Chapter 11 reorganization is known as a debtor-in-possession DIP when the debtor remains in full control of all of the assets.
The DIP is charged with the duties and responsibilities of a fiduciary to maximize the assets of the estate for the benefit of all creditors and has many of the rights and authority of a trustee. It is the event triggering a permanent injunction on collecting a debt in a bankruptcy case. Only individuals receive a discharge in a Chapter 7 case; b In a Chapter 11 non-individual case - When the plan is confirmed; c In a Chapter 11 individual case - When the plan is completed or when the court grants a hardship discharge; and d In Chapter 12 and 13 cases - When the plan is completed three to five years or when the court grants a hardship discharge.
Individual Chapter 11 debtors whose bankruptcies were filed prior to October 17, were discharged at confirmation of the plan. The situation in which a debtor goes through the bankruptcy proceeding and is determined to remain responsible usually for cause for all of the pre-petition liabilities.
There is no income from the forgiveness of debt because none was given. A denial of discharge is the result of an adversary proceeding filed against the debtor. Damages against the IRS could result if the injunction is violated. Also, see Violation of Stay.
The discharge injunction may not prevent the IRS from collecting on any lien it may have on exempt, abandoned, or excluded property. In a Chapter 11 case, an approved disclosure statement must generally accompany the proposed plan of reorganization before the plan is confirmed. The disclosure statement must contain adequate information concerning the affairs of the debtor to allow the creditors to make an informed judgment about the plan.
The term used when a bankruptcy proceeding is terminated prematurely. Debts are not forgiven. The debtor does not receive a discharge.
Upon dismissal, the debtor is no longer protected by the automatic stay. IRS can resume administrative collection. A Distribution Order authorizes the case trustee to pay creditors the amounts listed in the order. It is usually prepared by the Chapter 7 case trustee and entered by the court. A bankruptcy estate is created upon the filing of the bankruptcy case.
The estate includes property acquired by the estate after the petition is filed. However, certain property is excluded from the estate. Excluded property is usually certain types of retirement accounts. An examiner may be appointed in a Chapter 11 case to investigate the financial affairs of the debtor.
An examiner does not replace the debtor-in-possession, as a Chapter 11 trustee does. A property interest that does not become property of the bankruptcy estate upon the petition date. An NFTL is not required for collection from excluded assets on either dischargeable or non-dischargeable periods. Property intended to assist the debtor in making a fresh start and that cannot be liquidated by the trustee. Exempt property is not liable for any debts of the debtor except alimony, security interests, non-dischargeable tax debts, and dischargeable taxes secured by a Notice of Federal Tax Lien NFTL.
Depending upon state law, a debtor may choose between state and federal exemptions. Only individuals can exempt property e. Frequently used in Chapter 7 corporate accounts and Chapter 11 liquidating bankruptcies at close of bankruptcy. Processed by use of Form First Meeting of Creditors Section Meeting. The meeting at which the debtor is required to testify under oath about financial affairs and to respond to questions from creditors and the trustee.
Usually held within 20 to 50 days after a case is commenced under any chapter of the Bankruptcy Code. A transfer of any property by the debtor within one year before the bankruptcy petition with the intent to hinder, defraud, or delay a creditor. For cases filed on or after October 17, , the look back period is two years. Refers to the goal of bankruptcy to give the debtor a new financial life free from many past debts.
The discharge gives a debtor a fresh start. However, some debts are excepted from discharge. Tax liabilities and penalties which accrue during the interim period after an involuntary bankruptcy case is filed and before an order for relief is entered.
A person who files bankruptcy as an individual rather than as a partnership, Limited Liability Company LLC , or corporation. The individual debtor may file singly or jointly with a spouse. If the debtor is an individual, an "insider" includes a relative or partner of the debtor, a partnership in which the debtor is a general partner, a general partner of the debtor, or a corporation of which the debtor is a director, officer, or person in control.
An insider may be subject to different treatment under the Bankruptcy Code. For example, the time period for recovering preferential transfers to an insider is one year as opposed to 90 days for transfers made to non-insiders. Generally, understood to mean an inability to pay debts as they become due.
A debtor need not be insolvent to file bankruptcy. See Bankruptcy. The situation in which creditors meeting certain criteria file a bankruptcy petition, forcing a debtor into bankruptcy involuntarily. See Bankruptcy and Order for Relief. A section b return is not a return for purposes of the exceptions to discharge under section a of the Bankruptcy Code.
The situation in which spouses file a joint income tax return and file separate bankruptcy petitions either on the same date or on different dates. The cases may or may not be "consolidated" into a single case. The situation in which spouses file a joint income tax return but only one spouse declares bankruptcy. The person who files for bankruptcy protection is known as the debtor.
The other spouse, who did not file bankruptcy, is known as the non-debtor spouse. An IRS enforcement tool used to seize tangible and intangible assets.
The IRS must turn over to the estate property subject to levy but may seek adequate protection. A claim attaching property or rights to property as collateral for payment on a debt or obligation. The automatic stay terminates as to all creditors when the discharge is granted or the case is closed or dismissed, whichever event occurs earliest. For cases filed on or after October 17, , the stay may also terminate 30 days after the petition date if the debtor is an individual in a Chapter 7, 11, or 13 case and the individual was dismissed from an individual Chapter 7, 11, or 13 bankruptcy within the previous 12 months.
The act of reducing tangible and intangible assets to cash. This applies to Chapter 7 cases in which the business ceases to exist and its assets are sold. For individuals, the liquidation is limited to non-exempt assets. Some debtors liquidate through a Chapter 11 plan. Each bankruptcy court may make and amend its own local rules governing its practice and procedures in that specific jurisdiction.
However, the local rules cannot be inconsistent with the Federal Rules of Bankruptcy Procedure. The reports required to be filed in all Chapter 11 cases by debtors-in-possession or trustees. Generally, the reports include a cash receipts and disbursements journal, income statement, and balance sheet analysis. Generally, the IRS and other creditors do not file claims in no asset cases, unless or until the bankruptcy trustee provides further notice that assets have been found Bankruptcy Rule e and c 5.
Assets which are part of the bankruptcy estate i. See also Asset Case. A non-pecuniary loss penalty is a punitive penalty, or "fine. Generally, the Service receives only minimal payments on these types of penalties. These penalties may not accrue while the bankruptcy is pending and they may be non-dischargeable if they relate to a non-dischargeable tax. For additional information on discharge and non-pecuniary loss penalties, see IRM 5.
There is a prohibition on filing a new NFTL on a pre-petition tax debt until after the lifting of the stay. See also Secured Claim. A motion filed with the bankruptcy court by a debtor, creditor, or trustee to object to all or part of a claim. If necessary, a hearing will be held to resolve the dispute. Most bankruptcy court litigation, including objections to claim, are brought by motion pursuant to the less formal contested matter procedures.
Each Chapter 7 trustee must submit to the United States Trustee an interim report on each asset case that was open at the beginning of the reporting period. The filing of a bankruptcy petition constitutes an order for relief in a voluntary bankruptcy case. In an involuntary case, the court orders relief after notice and hearing on the merits of the involuntary case Bankruptcy Rule PACER maintains records and provides a current status on the majority of bankruptcy cases.
Assessed to reimburse and compensate the government for an actual loss of taxes. As used for bankruptcy purposes, "person" includes an individual, business entity partnership, corporation, etc.
Plans are filed in Chapters 11, 12, and 13 bankruptcy cases. Only the debtor can propose a plan in Chapter 12 and 13 cases. Taxes incurred after the filing of the bankruptcy petition for tax periods ending after the petition date. The voluntary pre-petition payment by the debtor of trust fund taxes to the Service is not a payment of property of the debtor, and thus, cannot be recovered as a preference.
Over the years, the Supreme Court has attempted to reconcile the problems that have arisen from these conflicting allocations of authority. Marshall, U. Agency v. Arkison, S. Sharif, S. Pipeline Const. Marathon Pipe Line Co. The Act stated that bankruptcy judges were to be appointed by the President with consent of the Senate for fourteen-year terms. Thus, the Act granted bankruptcy judges the type of broad authority that was generally reserved for Article III judges. Epstein, Bruce A.
Markell, Steve H. However, in contrast to Article III judges, bankruptcy judges did not receive the same benefits such as lifetime appointment and the protection against salary decrease. III of the Constitution. In a plurality opinion written by Justice Brennan, the Court noted the importance that the Constitution places on maintaining separation of powers between the three branches of government.
As a result, the plurality concluded:. III district court, and has vested those attributes in a non-Art. III adjunct. III courts. BAFJA created significant changes regarding the jurisdiction and judicial power of bankruptcy courts. In each judicial district, the bankruptcy judges in regular active service shall constitute a unit of the district court to be known as the bankruptcy court for that district.
Each bankruptcy judge, as a judicial officer of the district court, may exercise the authority conferred under this chapter with respect to any action, suit, or proceeding.
This provision establishes bankruptcy judges as adjuncts to the district court with judicial authority over the matters referred to them by the district court under chapter 6 of title Sommer eds. First, it creates three classifications of civil proceedings associated with title Second, it describes circumstances involving state law where the district court should abstain.
Section allows district courts to refer title 11 proceedings and cases to bankruptcy judges. Congress gave district courts this discretion in an attempt to remedy the constitutional concerns addressed in Northern Pipeline. Nevertheless, constitutional issues persisted. This subsection grants bankruptcy judges clear authority to enter final judgments in core proceedings arising under Title 11 or arising in a case under Title In such proceeding, the bankruptcy judge shall submit proposed findings of fact and conclusions of law to the district court.
These findings are examined by the district court and any objection by the parties is reviewed on a de novo standard. Following this examination and review, the district court enters a final judgment on the proceeding. In comparison, non-core proceedings at most may be classified as relating to a case under title Core proceedings are, at most, those that arise in title 11 cases or arise under title Nevertheless, the circuits have reached similar interpretations for each of these categories.
In Celotex Corp. Edwards, U. Higgins, F. Three recent Supreme Court cases have dramatically influenced the overall jurisdiction of bankruptcy courts. In , in Stern v. Marshall , the Court was asked to determine whether the bankruptcy court had the authority to enter a final judgment on a common law tortious interference counterclaim.
The Court divided this initial question into two further questions. Second, it asked whether the bankruptcy court had proper constitutional authority. The Court concluded that the plain language of the statute clearly granted the bankruptcy court the authority to enter a final judgment on the claim. The Court analyzed the second question, whether the bankruptcy court had constitutional authority, by looking to Article III of the Constitution.
The dissent disagreed and stated that the bankruptcy court had both statutory and constitutional authority to enter judgment on the tortious interference counterclaim. Schor to determine whether the non-Article III judge violated the separation of powers doctrine in a meaningful way.
In Executive Benefits , the Court was asked to determine how a bankruptcy court should proceed when it encounters a Stern claim. Identified by the characteristics of the counterclaim asserted in Stern v.
Agency, S. In Wellness , the Court held that Article III permits bankruptcy courts to enter final judgments on Stern claims provided that both parties in the action give their consent. The Court in Wellness concluded that when evaluating Stern claims:. Furthermore, the majority held that such consent may be satisfied by the express or implied consent of the parties. Ohio These approaches are by no means absolute and courts sometimes augment and combine them.
Furthermore, jurisdictional determinations under these methods are still subject to certain limitations, as discussed later in Part C 5.
These three approaches are described in the cases below and analyzed in greater detail in Part C. An example of this interpretation is found in the case of In re Luongo. This view was also expressed in the case of In re Fyfe.
This topic is discussed in detail in Part C 6. This is the broadest interpretation courts have adopted. The limitations regarding the timing of the tax liability and the parties involved provide important constraints which are described later in Part C 5.
The court in In re Bush articulated the reasoning behind this approach. In the interest of full disclosure, the author of this Comment was the summer intern for the Honorable William Lawrence who presided over this case.