Hotwire # 166 Feb. 12 2020 

 

WHAT THEY'RE SAYING 

   

"Morgan, I just want you to know that you are a hero to those of us in the trenches of bankruptcy work. Thanks for sharing your knowledge, analysis, and experience.."

 

- Richard Pettys, Jr. J. D.

  Woodstock, Georgia

NEWS - COMMENT  - EVENTS

 

NEW DEVELOPMENT IN

THE McCOY CASE

 

Morgan King writes:

 

I was recently contacted by the debtor, Linda McCoy, who explained that she once again attempted to obtain a discharge of her taxes from the bankruptcy court, as well as obtain sanctions against the taxing entity for violation of the discharge of the related tax penalties. The court's most recent ruling held against her on all 3 issues.

McCoy v. Mississippi Department of Revenue, United States Bankruptcy Court, S. District of Mississippi, Feb. 3 2020.

 

Those of us who deal with discharging taxes in bankruptcy are familiar with what is sometimes called the "McCoy rule," or the "McCoy test. In a nutshell, this 5th Circuit rule provides that if the debtor's tax return was filed late, even by one day, it is invalid and the tax cannot be dischargeable. McCoy v. Mississippi State Tax Comm'n, 666 F.3d 924 (5th Cir. 2012). The rule has been adopted in the 1st, 5th, and 10th circuits, but rejected in the 11th Circuit.

 

The 49-page opinion recounts a complicated procedural history, and a variety of issues, including late-filed tax returns, discharge of taxes, res judicata, what conduct constitutes a violation of the discharge, and the dischargeability of tax penalties.

 

The court basically held that the debtor had an opportunity to raise the salient issues in prior proceedings, and based on res judicata refused to reconsider its rulings on the taxes and interest on the taxes.

 

The court next addressed the discharge of penalties.  

 

In a nutshell, the debtor argued that while the taxes and interest may not have been discharged, the penalties were, and a letter from the taxing entity dunning her for the penalties violated the discharge.

 

The court drafted a complicated conclusion that it would not rule that the penalties were discharged, or that the MDR conduct violated the discharge.

 

However, in my view, the explanation of the court's reasoning in connection with the penalties was a bit strained, and the court seems to have bent over backward to interpret the rules against the debtor. In my view, the explanation for its ruling demonstrated that the court was simply tired of the debtor and disposed of the issue in a cursory method to get her out of the way. 

 

First, the court held that the debtor could not raise the issue of the penalties because, "it appears" to the Court that McCoy adopted an "all-or-nothing approach" in the prior adversary. Based on what "appeared" to the court, the court held that all issues, including the penalties, had been disposed of under res judicata, notwithstanding that the penalties were not actually addressed in prior proceedings, but only the taxes and interest on the taxes. 

 

In my view, that is not a reasonable ruling. Res judicata requires that all issues be addressed, and the discharge of penalties, which are subject to a different code section from the tax issues, were clearly not addressed in the earlier proceedings.  

 

In rejecting the debtor's standing to bring the penalty issue before the court because it merely "appeared" to have been disposed of previously, was unfair and violates policy to give the debtor the benefit of the doubt.*    

 

Next, the court held that, regardless of the res judicata holding, the penalties were not dischargeable because the section governing penalties provides that penalties are nondischargeable if related to nondischargeable taxes, and in this case the taxes had already been adjudicated not discharged. 11 U.S.C. § 523(a)(7)(A).  

But that was not the debtor's argument: 

Linda argued that the penalties were discharged based on § 523(a)(7)(B), arising from events that occurred over 3 years before the bankruptcy was filed, which these penalties clearly fit within.  

In my view, she was right. It "appears" to me that the court gloss-over that sub-section without explanation. Based on that, the court held the penalties were not discharged.   

Finally, in another over-simplified conclusion, the Court held that, in any event, the MDR's dunning letter did not constitute a violation of the discharge because the debtor had failed to prove that the MDR had no reasonable grounds (no "objectively reasonable basis") to believe the penalties had been discharged, and hence failed to establish that the conduct violated the discharge.**   

 

* "Debtor correctly points out that exceptions to discharge should be narrowly construed in favor of the debtor to serve the Bankruptcy Code's purpose of giving debtors a fresh start." Cal. Franchise Tax Bd. v. Berkovich (In re Voloshin) (Bankr. C.D. Cal. 2020).

 

But see In re Brown, 280 B.R. 760 (Bankr. M.D. Ga., 2002) Evidence and reasonable factual inferences are viewed in the light most favorable to the nonmoving party; In re Eury, 544 B.R. 563, 565 (Bankr. W.D.Pa. 2016); Neblett v. United States (In re AEH Trucking Co.) (Bankr. M.D. Pa. 2018)

**Held, "Willfulness is established by an intentional act with knowledge of the automatic stay. "Good faith is not a valid defense." In re Alder (Bankr. Md. 2016). See also Markley v. Dep't of Treasury (In re Markley) (Bankr. N.D. Ohio 2017) "Looking at the complaint in the light most favorable to Plaintiff, Plaintiff's factual position that the debts were discharged is clear." 

editor's note: Counsel should be aware that under recent law, a debtor seeking damages against the IRS for violation of the discharge must first "exhaust administrative remedies." Book, ¶ 5.10, 5.10(f).  

_________________________

 

Report abusive tax promotions and schemes 

 

Issue Number:  2020-06  

 

The IRS requests your assistance in identifying promoters of "too good to be true" abusive tax scams. Tax professionals have a duty to protect their clients. Those who do participate in scams face significant penalties.  

 

Common tax scams include falsifying income, inflating home-based business deductions, abusive trusts and off-shore schemes. Use the Report Suspected Abusive Tax Promotions or Preparers Form to make a referral to the IRS. Learn more at www.irs.gov/scams.

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The Democratic candidates' tax plans: Changes for individuals

 

By Omair Taher and Dustin Stamper 

 

AccountingToday.com 

 

Democratic candidates for the presidency have offered a variety of different ideas, but have appeared to coalesce around a handful of common concepts. To get a sense of where they stand, the individual candidates' positions on a number of changes for individual taxes are laid out below.

 

CLICK FOR MORE STORY 

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IRS SEEKS MORE PRIVATE TAX COLLECTORS

 

IRS locations nationwide to staff a specialized call line for taxpayers who receive a balance-due notice for unpaid taxes.

 

The IRS emphasizes that these are taxpayers at the earliest stages of the IRS collection process. Also, the work is different than that of the help lines for people calling with general questions during tax season.

 

CLICK FOR MORE STORY   

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EXPANDED IRS OPTIONS 

 

The Treasury Inspector General for Tax Administration (TIGTA) today released the following:

 

Inspections and Evaluations Report

 

The IRS Has Effectively Expanded Options for Taxpayers to Pay With Cash, but Participation Remains Low

HOT & IMPORTANT CASES

 

Symbol "¶" references corresponding sections of King's Discharging Taxes in Bankruptcy . Symbol "§" refers to the Bankruptcy Code or other statutes 

WHAT DOES THE "EVENT" OR "TRANSACTION" IMPOSING A PENALTY OCCUR FOR PURPOSES OF 11 U.S.C. § 523(a)(7)(B)?

 

In re Karim (Bankr. N.D. Ill. 2020) 

 

A penalty imposed with respect to an event occurring on a date over 3 years prior to the bankruptcy is dischargeable.  

 

However, exactly what that date is may be subject to interpretation, particularly under state tax procedures. This case involves law under Illinois Department of Revenue: 

 

Held: " ... allow for penalties to be imposed only on individuals who are found to have possessed contraband cigarettes, and who are not otherwise excepted for being licensed distributors or transporters, Karim had the continued opportunity, prior to entry of the dismissal order, to contest liability under the CTA by proving that the cigarettes were not contraband or that he was otherwise excepted.  

 

"The seizure, standing alone, would therefore not be sufficient for IDOR to impose the contraband cigarette penalty at issue in this matter. Although §§ 18b and 18c, like the provisions of the IRC, provide a precise calculation of the penalties that can be assessed-and despite the fact that, in this matter, the statutory amounts match the penalties that were ultimately assessed against Karim-at all times prior to the entry of the dismissal order on June 13, 2017, the penalties could not have been assessed or imposed.   

 

Held: DEBTOR'S FAILURE TO FILE REPORT OF IRS ASSESSMENT TO STATE TAX ENTITY RENDERED SUBSEQUENT ADDITIONAL STATE TAXES NONDISCHARGEABLE

Cal. Franchise Tax Bd. v. Berkovich (In re Voloshin) (Bankr. C.D. Cal. 2020) 

 

" ... the IRS's final determination related to Debtor's 2003 and 2004 tax assessment was May 12, 2008. The final determination to Debtor's 2005 tax assessment was April 14, 2008. Debtor never reported the changes to his 2003, 2004, and 2005 federal income taxes to the FTB. Although the IRS eventually provided the FTB this information, it does not satisfy Debtor's obligation under RTC § 18622(a) to file the report himself with the FTB."   

 

HELD: PROPERTY TAX PROOF OF CLAIM DISALLOWED BECAUSE NOT TIMELY FILED

 

In re Van (Bankr. N.D. Ill. 2020) 

 

"Van's objection to the Treasurer's amended claim will be sustained and the claim disallowed. The amended claim is late, and the amendment does not relate back to the Treasurer's original claim.

 

As Van correctly contends, his confirmed plan is binding on the Treasurer, who had notice of the plan and did not object. She cannot return years after confirmation and insist on better treatment.  

 

"In this case, the Treasurer filed her amended claim well after the bar date. Because the Treasurer is a "governmental unit," see 11 U.S.C. § 101(27), she had 180 days after Van's petition date to file a proof of claim. The petition date was June 9, 2016, making the Treasurer's bar date December 6, 2016.

 

The Treasurer did not file her amended claim until March 1, 2019, almost 27 months later.  

 

"The Confirmed Plan Binds the Treasurer "Well before the Treasurer filed her amended claim for the 2012-14 taxes, Van confirmed a plan that treated those taxes.

 

His confirmed plan binds the Treasurer, who had notice of it and did not object to its confirmation."  

 

HELD: TAXPAYER FAILED TO PROVE ELIGIBLE FOR CURRENTLY NOT COLLECTIBLE STATUS AT CDP APPEAL.

 

Aviles v. Comm'r (T.C. 2020)

 

For procedural reasons the Court determined that it was an "equivalent hearing," not a Collection Due Process appeal.

 

"To be entitled to have his account placed into CNC status, the taxpayer must demonstrate that, on the basis of his assets, equity, income, and expenses, he has no apparent ability to make payments on the outstanding tax liability. See Foley v. Commissioner, T.C. Memo. 2007-242, 94 T.C.M. (CCH) 210, 212; Internal Revenue Manual (IRM) pt. 5.16.1.1 (Aug. 25, 2014). 

 

"A taxpayer's ability to make payments is determined by calculating the excess of income over necessary living expenses. Rosendale v. Commissioner, T.C. Memo. 2018-99, at *9; IRM pt. 5.16.1.2 (Jan. 1, 2016).  

 

HELD: TAXPAYER FAILS TO ESTABLISH AN INSTALLMENT PLAN AT CDP APPEAL

Northside Carting, Inc. v. Comm'r (T.C. 2020)

The Tax Court rejected taxpayer's challenge to the tax liability, saying:

 

However, a taxpayer is precluded from challenging his underlying liability in this Court "if it was not properly raised in the CDP hearing." Thompson v. Commissioner, 140 T.C. 173, 178 (2013); see Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). "An issue is not properly raised if the taxpayer fails * * * to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity." Moriarty v. Commissioner, T.C. Memo. 2017-204, 114 T.C.M. (CCH) 441, 443 (quoting section 301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.), aff'd, 122 A.F.T.R.2d (RIA) 2018-5984 (6th Cir. 2018).

 

The Court then rejected taxpayer's request for IA due to failure to provide requested financial documents in a timely manner.

 

"The SO informed petitioner that, in order for him to consider an installment agreement (IA) or an offer-in-compromise (OIC), petitioner needed to supply: (1) a completed Form 433-B, Collection Information Statement for Businesses, with supporting documentation; (2) signed copies of unfiled tax returns for 2015 and 2016; (3) a Form 656, Offer in Compromise, or a proposal for an IA; and (4) proof of timely deposit of all Federal employment taxes for the current quarter.

 

Petitioner did not submit any of the requested information before the hearing.  

 

"The SO agreed and asked petitioner to provide by May 9, 2017, a completed Form 433-B, three months of bank records, a current profit and loss statement, a proposed IA, signed quarterly tax returns for the two most recent calendar quarters, and a list of assets, accounts receivable, and accounts payable.  

 

"We have consistently held that it is not an abuse of discretion for an Appeals officer to reject collection alternatives and sustain collection action where the taxpayer has failed, after being given sufficient opportunities, to supply the necessary information.

 

HELD: TAXPAYER COULD NOT GET FEES AND COSTS AGAINST THE IRS FOR "SUBSTANTIALLY JUSTIFIED" POSITION   

   

From ProcedurallyTaxing.com  

 

MARK C. KLOPFENSTEIN v. COMMISSIONER OF INTERNAL REVENUE, T.C. Memo. 2019-156 UNITED STATES TAX COURT  Docket No. 17435-17. Filed December 9, 2019.

 

 

In this post Professor Galler examines a recent decision denying a taxpayer fees and costs against the IRS. (Bryan Camp also covered the case here.)

 

For those galvanized to learn more about qualified offers after reading this post, I recommend guest blogger Professor Ted Afield's post on nominal offers, and Stephen Olsen's grab bag of cautionary tales. Christine

 

"Taxpayers rarely recover attorneys' fees in tax cases despite the existence of a statute specifically providing for such recoveries.

 

The Tax Court's recent decision in Klopfenstein v. Commissioner, TC Memo 2019-156 (Dec. 9, 2019), is an example of why: the statutory requirements and the manner in which they are interpreted are overly exacting and counterintuitive. 

 

Klopfenstein involved a settlement of assessed penalties at Appeals for ten cents on the dollar - a 90 percent reduction in an assessed penalty - clearly raising the question of whether the government's position in the case was substantially justified.

 

Yet, in an opinion that relied heavily on established precedent, the court concluded that the IRS never took a "position" within the meaning of the statute and therefore that the taxpayer could not recover attorneys' fees.

 

HELD: 10-YEAR SOL FOR COLLECTION TOLLED FOR PERIOD OF CDP APPEAL

 

United States v. Komlo (3rd Cir. 2020) 

 

We cite 2 holdings in this case:

 

Komlo first claims the Government's suit was untimely. Her 1998 tax liability was assessed on August 11, 2003. The Government sued almost twelve years later (on July 7, 2015), beyond the ten-year limitations period required by 26 U.S.C. § 6502(a)(1). So the Government's suit is untimely unless the statute of limitations was tolled. 


Before the limitations period expired, on November 7, 2012, Komlo filed a request for a Collection Due Process (CDP) hearing with the Internal Revenue Service (IRS). Such requests typically toll the statute of limitations until the IRS resolves them. See 26 U.S.C. § 6330(e)(1).

 

But the same IRS document that shows Komlo filed the CDP request also says that it was "withdrawn" just under a month later. App. 224.

 

So Komlo argues there was at least a material factual dispute over the suit's timeliness that should have precluded summary judgment. We disagree.

The IRS did not resolve Komlo's CDP hearing request until September 16, 2014, which meant the ten-year period was tolled for 708 days: from the day she filed her CDP request on November 7, 2012 until the expiration of her time to appeal the agency's determination on October 16, 2014 (30 days after the decision). ... 

 

Because of that tolling, the Government's deadline to file a timely complaint was July 20, 2015. It satisfied that deadline by filing on July 7, 2015. 

 

Also HELD: IRS COULD STILL COLLECT LIENS AGAINST SPOUSE BECAUSE SPOUSE NOT INCLUDED IN SETTLEMENT STATEMENT 

 

"That order required the sale proceeds to be used to pay "liens of public record," which the IRS specified were "solely" his liabilities. The court again directed that proceeds be used to pay "liens of public record[]" when granting Ms. Komlo's emergency petition for the condo's sale the next year. 

 

"She then signed a settlement statement confirming that the payment satisfied her ex-husband's federal tax liens, without mention of her individual or their joint liabilities. And the letter accompanying payment to the IRS referenced only his liens.

 

So the IRS correctly applied the condominium-sale proceeds to only his individual liens, not to the ex-spouses joint and several tax liabilities. Accordingly, the District Court did not err in reducing her unpaid assessment to judgment."

Finally, Komlo challenges an accuracy-related penalty for understatements of her 2008 income. The IRS's Automatic Underreporter (AUR) program added the penalty under 26 U.S.C. § 6662(a) and generated a letter to Komlo. 

 

Komlo responded to explain why she had underreported her income, but the IRS decided to assess the deficiency and penalty against her. After her arguments against the accuracy of the 2008 assessment (and penalty) failed at summary judgment, Komlo moved for reconsideration. 

 

She claimed, for the first time, that the IRS imposed the penalty without proof of a supervisor as required by 26 U.S.C. § 6751(b)(1). Regardless of the force of her underlying statutory argument, Komlo's challenge cannot succeed because it was too little, too late. 

 

HELD: FEDERAL TAX LIENS ATTACH TO DEBTOR'S "ALTER EGO" PROPERTY (DEBTOR'S CORPORATION)

 

United States v. Cornwell (M.D. Fla. 2020) 

 

" ... a federal tax lien not only affects all property and rights to property of the delinquent taxpayer but also reaches property in the hands of the taxpayer's alter ego. 

 

Shades Ridge Holding Co. v. United States, 888 F.2d 725, 728 (11th Cir. 1989); Eckhardt v. United States, 463 F. App'x 852, 855 (11th Cir. 2012) (under Florida law, alter ego liability is determined using the same standard used to pierce the corporate veil); see Old W. Annuity & Life Ins. Co. v. Apollo Grp., 605 F.3d 856, 862 (11th Cir. 2010) (Florida law governs the determination of alter ego status in the context of federal tax liabilities). 

 

An "important factor relevant to whether an individual dominates the corporation to such an extent as to negate its separate identity is whether corporate funds were used for the individual's benefit." Eckhardt, 463 F. App'x at 856. 

 

Likewise, "[t]he veil will be pierced and the corporate entity disregarded if it is shown 'that the corporation is formed or used for some illegal, fraudulent or other unjust purpose which justifies piercing the corporate veil.'" Id.; Shades

idge Holding Co., 888 F.2d at 728 (holding corporation liable for taxpayer's debt applying federal common law)."

 

 

 

 

 

FROM MORGAN KING'S

CHECKLIST OF 51 

THINGS TO WATCH OUT FOR

IN TAX DISCHARGE CASES 

 

References "¶" refer to the corresponding section of King's Discharging Taxes in Consumer Bankruptcy Cases. TaxPublishing.com, BankruptcyBooks.com

  

# 31 Failing to file claim on behalf

 

The IRS frequently fails to file a claim in chapter 7 cases for non-dischargeable taxes. Official Rules 3002-3008. 11 U.S.C. § 501(a).   

 

In probably over 90% of Chapter 7 cases it doesn't matter, because they are no-asset or "insolvent bankruptcies." i.e., All of the debtor's assets are exempt so there are no assets that the IRS need be concerned about regarding distribution from the estate.*  

 

However, in some cases, there are non-exempt assets; these are "solvent" bankruptcies; the trustee may collect and liquidate the non-exempt property, and pay any recovered money to the general unsecured creditors. 11 U.S.C. § 704(a)(1), § 726(a). 

 

If the IRS has not filed a proof of claim, in most cases the trustee will not pay any of the tax liabilities because there is no proof of claim. 11 U.S.C. § 726(a). Book ¶ 3.34.

 

It would be a shame to see funds recovered from non-exempt property go to creditors who will, in any event, be discharged. What the debtor would probably rather see is the recovered funds go to pay down non-dischargeable debts, such as taxes.  

 

Hence, in those situations, it is probably better for the debtor (i.e., the debtor's attorney) file a proof of claim on behalf of the taxing entity. 11 U.S.C. § 501(c), book at  ¶ 3.19, ¶ 320, ¶ 4.17.      

            

*  The IRS will, of course, keep whatever post-discharge rights they have to enforce a tax lien. 

BANKRUPTCY & TAX PUBLICATIONS

 

 

"I learned a lot and still rely on the Tax Discharge Book. That's invaluable."

- Edward Gonzales, Esq., Wa. D.C. 2012

"I have two books by Morgan King: Discharging Taxes in Consumer Bankruptcy Cases and IRS Offers in Compromise.

 

"As a 52-year practicing attorney, with 48 of those years in active bankruptcy practice, I think these books are the most practical and helpful law books I have ever used.  I consult often with both books in my daily practice and find the answer almost all the time.   

 

"Thank you, Morgan, for helping lawyers give their clients the best possible service."

 

- Marion E. Wynne Esq. Fairhope, AL 10/07/2019 

 

I enjoyed reading your book on taxes. I have many good contacts with Georgia Department of Revenue here. The revenue officers like to see my cases as I usually get my Chapter 13 tax lien stripping cases approved without a lot of hassle.

 

One of the regional officers dropped by my office a few years ago to introduce himself. He said he wanted to say hello since I was the only one down here in this corner that knew what they were doing. I thought you might get a little laugh out of that one.

 

Shelba Sellers, Esq.  07/13/19

___________

I have been using your practice guide with GREAT success.  Thank you.  I just ordered the forms CD.  But then got to wondering if I should buy the update/recent version to my practice guide??

 

My daughter just got licensed and I am insisting that she read the practice guide cover to cover.

- Timothy Trichler, Esq.

Cadillac, MI 2019

_______________

 

It is so great to have such a "top" go-to person! I know so many people who are in need of your services.

- Client K. P.

_____________

Morgan, I just want you to know that you are a hero to those of us in the trenches in bankruptcy work. Thanks for sharing your knowledge, analysis and experience!.

- Richard Pettys, Jr., J.D.

Woodstock, Georgia

____________

I'm a big fan of yours and have two of your books--a little outdated. You have done so much to educate the BK/Tax bar!

- Michael K. Mehr, Esq. Santa Cruz, CA Feb. 14 2018

____________

 

Morgan, Your work is GREAT!

- Richard I. Isacoff, J.D. , Western New England University School of Law (N.Y.)

____________

King Bankruptcy Books provides some of the most trusted and unique content in the consumer bankruptcy market.

- Phil Rosenthal, CEO, FastCase.

__________

 

Mr. King is the pre-eminent authority in the bankruptcy community ...

- Robert Sampson, Director of Customer Service, Pitbulltax

__________

 

When I'm reading King's book on discharging taxes I feel like the Burning Bush is speaking to me.

- Kelly Nebiolini, Esq. Oakdale, CA

__________

 

The book is wonderful! Great stuff ... perfect format! -

Roberto Rivera, paralegal, Cinneminson, NJ

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I have purchased other books from you - - - including Discharging Taxes and McGoldrick's Chapter 11 - - - These are my bible - - - both old and new testaments!" -

- Patrick Greenwell, Esq. Sonoma, CA

__________

 

I LOVE Mr. King's website and all of the books and seminars he offers.   We can't wait to order more.  You're in the monthly budget!

- Kathleen M. Roberts, Paralegal, Palm City, FLA

__________

 

Your publication is considered the most authoritative by people I know in the business.

- Ryan Davies, Esq. Lake Forest, CA

__________

 

The King expertise has saved many a bankruptcy attorney from going nuts. I handle only small business and tax cases have 25 plus years experience and the King guide is something I could not do without.

 

I would endorse Morgan's books anytime. Thank you for all the hard work in giving us something practical and well researched. When the law changed and you came out with the Reform Guide, I knew I had to have it. It helped me feel competent getting back to work.

- Marguerite Kirk , Esq. Fort Worth,TX Board Certified Business Bankruptcy American Board Bankruptcy Certification,

__________

 

I really appreciate the great information you provide for us bankruptcy attorneys. As a solo, I don't think I would make it without your resources. Thank you!

- Alexis Crow, Esq. Charlottesville, VA

__________

 

I need your highly recommended book sooner rather than later.

- Allan Pearlman, Esq. New York, N.Y.

__________

 

Thanks for doing what you do. There's a tremendous need for it. I know of several atty's in my area who don't know (enough) about tax discharge. More EA's who practice representation need this knowledge as well. Our clients aren't effectively served if we don't present all their options.

- Lisa Sexton, E.A., Carlsbad, N.M.

__________

 

Every serious bankruptcy practitioner should have this book!

 

- Ike Shulman, former President of the National Association of Consumer Bankruptcy Attorneys, San Jose, CA

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Any practitioner who does any degree of bankruptcy tax work or analysis would be crazy not to have this tax discharge treatise! I found it immensely practical, helpful, insightful, and comprehensive.

- Matthew Tozer, Esq.,Fullerton, CA

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I have been a panel trustee for over 15 years, and I routinely attend the Southeastern conference in Atlanta and the NABT conferences. I have found your book to be extremely helpful.  It is the best organized book of its type I have ever utilized. -

- Thomas H. Fluharty, Chapter 7 panel trustee, Clarksburg, WV

__________

 

Thank you for your response.  I, as all in this field, truly appreciate your comments as the recognized expert in this difficult area. -

- Gerald H. Davis, San Diego

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Mr. Morgan, the book was worth the wait!

- Kenneth Allen

__________

 

I have recently ordered some of your books, in particular, the one related to discharging taxes in bankruptcy.  I appreciate the invaluable information you have given other attorneys.  As a small ( 2 person office) it is very difficult to venture outside your comfort zone of area of practice.  The books and especially the listserve help me to do that.  I cannot thank you enough.

- Bob Ellis, Columbus Ohio

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As a bankruptcy practitioner for fourteen years I can say beyond question that every bankruptcy practitioner should purchase this book.

- Michael Mehr, Santa Cruz, CA

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One of the most helpful legal books I have ever read. It is concise, well organized, and full of practical information not available elsewhere. -

August Bullock, San Francisco, CA

__________

As a tax lawyer, tax professor and tax author, I think your treatise is the best in its field.

- Kneave Riggal, South Pasadena, CA

 

Get the book to me on Wednesday! Please don't fail me!

- Frantic lawyer, Los Angeles, CA

__________

 

The Franchise Tax Board's Insolvency Estate Unit will be using the book as a technical filed guide for the staff. We have recently placed an order for additional copies. -

 

Bill Moore, Calif. Franchise Tax Board, Special Procedures

__________

 

I took the opportunity to plug your book to those in attendance, as I felt it was a necessary addition to the law library of anyone practicing in the area of bankruptcy and income taxes.

- Mark Segal, Las Vegas, NV

__________

 

... have read and reread most of its material with great interest. Please accept my compliments on a thorough and professional treatise.

- Charles L. Pitcock, Esq., Cleveland, Ohio.

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I have used your book often and certainly consider you an authority on discharge of taxes in bankruptcy.

- Kenneth S. Rappaport, Boca Raton, FL

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It is a wonderful desk book.

- Kenneth Klee, Los Angeles, CA.

__________

 

I ordered the book last year and I was extremely impressed with it. I have recommended it to a number of attorneys as the only source of its kind I have found. As my present practice I find a large number of clients whose tax problems have been exacerbated by attorneys who fail to understand what your book explains in great detail. Even if an attorney does not practice in the bankruptcy area, he should be acquainted with your book as a service to his own clients.

 

- Don Hairgrove, La Mes, CA.

__________

 

. . . so informative and well written that I spent half the night reading it and then the remaining half thinking over the issues. The lack of sleep for one night was a small price to pay for finding the answers to many of my questions.

- Frank Kloster, Santa Maria, CA

__________

 

I would like to take a moment to thank you for the work you've done on your book Discharging Taxes in Bankruptcy. I have found it to be an eye-opener, and an indispensible piece of reference work.

-

George Parker, Parker & Assocs., Decatur, GA.

 

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Hotwire # 001 Feb. 26 2020

BOOKS

KING'S DISCHARGING TAXES IN BANKRUPTCY

2019 # 4 UPDATE

(last update for 2019) 101 pages on thumbdrive

(UPDATES KING'S DISCHARGING TAXES In Consumer Bankruptcy Cases)
602 pages thumb or hard copy

Thumb-drive Only $ 99.95 Hard-copy $125.00 (when available)

NEWS - COMMENT - EVENTS

Morgan King:

 

Trustee's Fiduciary duties in Solvent v. Insolvent Cases

See, also, Hot Cases, below.


The basic rule regarding a bankruptcy trustee's fiduciary duties in consumer bankruptcies addresses insolvent estates ...i.e., the typical consumer chapter 7 case that has no non-exempt assets that the trustee can recover and sell per 11 U.S.C. § 704(a), or whose non-exempt assets are insufficient to result in a distribution to the debtor. This applies to over 90% of consumer chapter 7 duties (ABI 97.13%). 11 U.S.C. § 101(32):

 

The term "insolvent" means-

"(A) with reference to an entity other than a partnership and a municipality, financial condition such that the sum of such entity's debts is greater than all of such entity's property, at a fair valuation ... "

In such cases, the trustee owes a "fiduciary duty" to the creditors to protect their interests; as a general rule, there is no such duty owed to the debtors.

A "solvent estate," however, complicates the issue of trustee's fiduciary duties;

A solvent estate means the debtor will have funds coming back to him or her after all unsecured debts and administrative costs are satisfied. This changes trustee's status somewhat in relation to the debtor.

I'm looking at the U.S. Trustee's Chapter 7 Handbook, Part 4(B)(12) (paragraph following paragraph 12), which says -

"The trustee is a fiduciary charged with protecting the interests of all estate beneficiaries - namely, all classes of creditors, including those holding secured, administrative, priority, and non-priority unsecured claims, as well as the debtor's interest in exemptions and in any possible surplus property. The duties enumerated under section 704 are specific, but not exhaustive. " (emphasis added)

Case law interpreting the trustee's "fiduciary duty" in connection with a solvent estate is pretty scarce, and when alluded to is typically vague.

The debtor must first be deemed a "party in interest."

 

See, e.g., Pergament v. Varela (In re Varela), 530 B.R. 573 (Bankr. E.D.N.Y. 2015):

"Upon showing of surplus funds in estate after distribution to creditors, Chapter 7 debtor is a "party in interest" to whom trustee owes a fiduciary duty."

In re Schumann Tire and Battery Company, 145 B.R. 104 (Bankr.M.D. Fla. 2005)."

Let's assume the debtor's house has $50,000 non-exempt equity. Assume the house could be sold and the proceeds used by the trustee to pay unsecured creditors and administrative costs; assume the debts owed to unsecured creditors are less than the liquidation value of the equity in the house, resulting in a surplus to the debtor; Does the trustee owe a fiduciary duty to the debtor?

I have found few cases that adequately address that situation.

But, it is nonetheless clear that if it is apparent that the cash raised from selling the equity would pay all unsecured debt and leave some for the debtor, there is a duty owed to the debtor. What is that duty?

From the United States Trustee's HANDBOOK FOR CHAPTER 7 TRUSTEES:

"Section 323(a) provides that the chapter 7 trustee is the representative of the estate. The trustee is a fiduciary charged with protecting the interests of all estate beneficiaries - namely, all classes of creditors, including those holding secured, administrative, priority, and non- priority unsecured claims, as well as the debtor's interest in exemptions and in any possible surplus property." (emphasis added)

From In Re Christensen, 598 B.R. 658 (Bankr. Utah 2019):

"In the case of a chapter 7 trustee and debtor, a fiduciary relationship between the two does not exist until the trustee holds property to which the debtor is entitled either because the debtor has a validly claimed exemption in it or it constitutes a surplus after payment of all claims. The context in which that relationship arises defines the scope of the trustee's duties.

"A debtor's entitlement to exempt or surplus property does not create a vast array of fiduciary duties running from a trustee to a debtor, nor does it oblige a trustee to act broadly in the debtor's best interests. A trustee becomes a fiduciary vis-à-vis a debtor because he holds property that belongs to the debtor by operation of law.

"The scope of his duty, therefore, is strictly limited to safeguarding property of the estate in the trustee's possession or the proceeds from the sale thereof to which the debtor is entitled and ensuring that the debtor receives that property."

The trustee in Christensen sought to sell the debtor's home. The debtor's objected based on breach of fiduciary duty, negligence, and civil conspiracy.

The Christensen case is a fairly thorough exploration of the concept of a trustee's fiduciary duty, alluding to a number of issues, including -

Is the debtor a "party in interest?"


Will there be surplus funds payable to the debtor?


Is there a "fiduciary relationship?"


Is the trustee's attorney also subject to a fiduciary duty?


What is the appropriate venue (state, federal, or bankruptcy)?


Will the court grant leave to sue in a court other than bankruptcy court? Was the trustee's conduct "ultra vires?"


Is a "carve-out" to pay trustee's fees and costs allowable?


Is there immunity (i.e., the Barton doctrine)?*
what is "qualified immunity?"

* Bankruptcy courts have held that the Barton doctrine "precludes suit against a bankruptcy trustee for claims based on alleged misconduct in the discharge of a trustee's official duties absent approval from the appointing bankruptcy court."

HOT CASES

Symbol "¶" references corresponding sections of

King's Guide to Bankruptcy Trustees' Powers & Duties

Symbol "§" refers to the Bankruptcy Code or other statutes

HELD: Trustees and their attorneys are entitled to absolute immunity (derivative trustee immunity and independent attorney immunity) for all actions taken pursuant to a court order. Numerous sister circuits have held that trustees have qualified immunity for personal harms caused by actions taken within the scope of their official duties.

Only ultra vires actions - actions that fall outside the scope of their duties as trustees - are not entitled to immunity.

Baron v. Sherman (In re Ondova Ltd. Co.), 914 F.3d 990 (5th Cir. 2019) citing Ondova v. Trustee adversary case # 14-03121-SGJ (2017)

Jeffrey Baron appeals the district court's dismissal of his bankruptcy "adversary proceeding" against Daniel J. Sherman, the trustee responsible for administering the bankruptcy estate of Ondova Limited Company.

 

The Fifth Circuit affirmed the district court's dismissal of Jeffrey Baron's bankruptcy adversary proceeding under Rule 12(b)(6) against the trustee responsible for administering the bankruptcy estate.

 

The court held that the trustee was entitled to absolute immunity for all actions taken pursuant to a court order, and entitled to qualified immunity for all other acts within the scope of his trustee duties.

Furthermore, claims against the trustee's attorneys also failed because the attorneys were covered by both derivative trustee immunity and independent attorney immunity; the breach of fiduciary duty claim failed because Baron did not plausibly plead gross negligence; and Baron failed to raise the new causes of action contained within his proposed amended complaint in his briefs or argue that the district court erred in finding these claims unsuccessful.

_____________________

HELD: The bankruptcy trustee is the real party in interest with respect to claims falling within the bankruptcy estate and has exclusive standing to assert claims that fall within the bankruptcy estate. 11 U.S.C. § 323; see also, e.g., United States ex rel. Spicer v. Westbrook, 751 F.3d 354, 362 (5th Cir. 2014) (discussing undisclosed claims); Croft, 737 F.3d at 375; Douglas v. Delp, 987 S.W.2d 879, 882 (Tex. 1999).

Shankles v. Gordon (Tex. App. 2018)

To determine whether a debtor had a property interest in the causes of action at the time the debtor filed for bankruptcy, courts must determine when the debtor's causes of action accrued under state law.

" ... whenever one person may sue another, a cause of action has accrued. See Swift, 129 F.3d at 795 (citing Luling Oil & Gas Co. v. Humble Oil & Refining Co., 191 S.W.2d 716, 721 (Tex. 1946)); S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996) (cause of action accrues when wrongful act causes an injury, regardless of when plaintiff learns of that injury or whether resulting damages have yet to occur)."

"A person suffers injury from faulty professional advice when the advice is taken."

"Once an asset becomes a part of the estate, the debtor's rights in the asset are extinguished unless the trustee abandons the asset pursuant to section 554 of the United State Bankruptcy Code. See 11 U.S.C. § 554. 

 

There is nothing in the record to show that the Chapter 7 Trustee abandoned the claims for professional negligence, breach of fiduciary duty, or breach of the implied covenant of good faith and fair dealing against Gordon, Hynds & Gordon, or McNees.

Further, in the settlement and compromise agreement, the Chapter 7 Trustee released any and all claims that were the property of the bankruptcy estate that were asserted or could have been asserted in the adversary proceeding."

Section 554 of the Bankruptcy Code states, inter alia:

(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.

(b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.

(c) Unless the court orders otherwise, any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title.

(d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate.

____________________

 

HELD: Under certain circumstances an aggrieved debtor may sue the chapter 7 trustee in bankruptcy court for breach of fiduciary duty, but not in state or district court.

In Re Christensen 598 B.R. 658 (Bankr. Utah 2019) (see remarks about this

case in the NEWS - COMMENT - EVENTS" section, above)

________________________

HELD: As Trustee of the Debtor's bankruptcy estate, the Trustee stands in the shoes of the Debtor and assumes causes of actions that belong to the Debtor.

HELD: the Trustee also stands in the shoes of judgment creditors

 

Keats v. Cogan (In re Bullitt Utilities, Inc.) (Bankr. W.D. Ky. 2020) Trustee's claim of breach of fiduciary duty denied for lack of evidence.

_____________________

 

HELD: Trustee's suit based on breach of fiduciary duties is granted in part, denied in part.

Murphy v. Acas, LLC (In re New England Confectionery Co.) (Bankr. Mass. 2020)

 

The trustee plausibly alleges that Mr. McGee breached his duty of loyalty to NECCO Candy by terminating an insider lease with NECCO Realty as to which no rent payments were expected to be made and replacing it with a third-party lease with Atlantic as to which rent payments would be required and which imposed a near-term relocation obligation at significant expense to NECCO Candy.

The plausible allegations in the complaint further support a determination that Mr. McGee, in his dual capacity as director of NECCO Candy and manager of NECCO Realty, acted for the benefit of ACAS/Ares and to the detriment of NECCO Candy and its creditors while it was insolvent.

 

The trustee's claim for breach of the duty of loyalty as to Mr. McGee, therefore, will proceed to trial.

_____________________

 

Trustee's powers to recover fraudulent transfers

Brick v. Ring (In re Nat'l Risk Assessment Inc.) (Bankr. W.D. N.Y. 2020)

In this action to avoid allegedly fraudulent conveyances, the trustee seeks to recover numerous transfers to the debtor's principal owner and three of his relatives.

 

The case's many complex issues include the choice of law regarding the applicable "look back" period, and whether the debtor's financial statements provide adequate proof of insolvency.

The trustee alleges that "from August 15, 2008, to August 15, 2014, Joseph directed NRA to pay personal expenses and to make other payments on his behalf in the total amount of $1,089,572.81."

 

He further claims that John III received $35,687.12 from the debtor between March 23, 2011, and April 16, 2013; and that John Ring, Jr., and Nora Ring received $41,450 from NRA between July 7, 2010, and April 5, 2011. The trustee now seeks to recover these sums.

__________________

HELD: Party need not seek bankruptcy court

In re Horton (Bankr. N.M. 2020)

The majority rule is that a plaintiff need not seek approval before suing a bankruptcy trustee in his appointing bankruptcy court. "leave of the bankruptcy court is not necessary for the Debtors to sue the trustee in the bankruptcy court appointing the trustee.

The Barton doctrine protects receivers and trustees from "irksome" litigation in foreign courts seeking to hold them personally liable for alleged wrongful conduct committed during estate administration.

Permission is needed to sue trustees in foreign courts (which includes the district court), but not to bring claims in the appointing bankruptcy court.

Simply stated, the Barton doctrine does not shield trustees from lawsuits. Rather, the doctrine requires the bankruptcy court to determine where the suit may be brought, not whether the trustee may be sued.

This "Barton doctrine," i.e., that a receiver cannot be sued in another jurisdiction without leave of the appointing court, has been held to apply to lawsuits against bankruptcy trustees. See, e.g., Lankford v. Wagner, 853 F.3d 1119, 1122 (10th Cir. 2017) (citing Satterfield v. Malloy, 700 F.3d 1231 (10th Cir. 2012), the Tenth Circuit held that the Barton doctrine precluded a suit against a bankruptcy trustee in district court absent approval from the appointing bankruptcy court, for all claims except those alleging breach of fiduciary duty, trustees have absolute quasi-judicial immunity from personal liability if they acted within the scope of their authority).

ed. note: the Horton case addressed another issue, i.e., the difference between suingin rem versus in personam.

QUESTIONS - REMARKS - SUGGESTIONS

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SUBMIT YOUR QUESTIONS - REMARKS - SUGGESTIONS

Questions of law - procedure - process - case handling etc. ABOUT CONSUMER BANKRUPTCY TRUSTEES

The King Trustee Law Hotwire # 1 Feb. 26 2020 © Morgan D. King. All Rights Reserved. TaxHotwire.com

1. Abusive Credit Reporting
2. Discharging Taxes in Bankruptcy
3. Abusive Debt Collection
4. IRS Collection Due Process
5. Trustee's Powers & Duties (pending)
6. Discharging Student Loans
7. IRS Offers-In-Compromise
8. Fundamentals of Bankruptcy Law & Practice 9. The Means Test
10. Avoiding & Stripping Liens
11. Fees & Ethics
12. 3-Vol. Tax Practice Library
13. The Total Tax Practice Library
14. 12-Book Bankruptcy Library
15. 12-CD Bankruptcy Library
16. [reserved]
17. King's Tax Article Library
18. Bankruptcy Checklist Library
19. IRS Innocent Spouse
20.[reserved]
21. Consumer Rights Library

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Also see King Law Reporter on the Fastcase site, NACBA and Consumer Bankruptcy Journal. The Morgan King Company, Box 2952 Dublin, CA. Morgan@morganking.com. 925 829- 6460.

Morgan@MorganKing.com

______________________________

 

HOTWIRE # 164 DEC. 2019

 

HELD: BRIDGE TOLL IS NOT A "TAX"

 

Am. Trucking Ass'ns v. Alviti (1st Cir. 2019)

 

¶ 2.2 Is It a Tax?

 

This appeal poses the question whether bridge and highway tolls authorized by a Rhode Island statute are taxes within the meaning of the Tax Injunction Act ("TIA").

 

The state statute in question authorizes the Rhode Island Department of Transportation ("RIDOT") to collect from tractor-trailers certain "tolls for the privilege of traveling on Rhode Island bridges" in order to pay "for replacement, reconstruction, maintenance, and operation" of the bridges. R.I. Gen. Laws § 42-13.1-4(a). 

 

The plaintiff trucking entities filed this lawsuit asking the United States District Court for the District of Rhode Island to enjoin the collection of those tolls as violative of the Commerce Clause of the United States Constitution.

 

The district court dismissed the lawsuit for want of jurisdiction under the TIA, which states that "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." 28 U.S.C. § 1341. For the following reasons, we find the TIA's  

prohibition inapplicable to the Rhode Island tolls, and reverse.   

 

" ... we have looked at additional factors in making the tax-fee determination, including whether "[t]he agency places the money in a special fund," San Juan Cellular, 967 F.2d at 686; see also Cumberland Farms, Inc. v. Tax Assessor, 116 F.3d 943, 946 (1st Cir. 1997); Trailer Marine, 977 F.2d at 6, whether collection of the charge is "assigned to the State Tax Assessor," Cumberland Farms, 116 F.3d at 946, whether the requested injunction "poses [a] threat to the central stream of tax revenues," Trailer Marine, 977 F.2d at 6, and whether the enacting entity referred to the charge as a "tax," Cumberland Farms, 116 F.3d at 946. 

 

We therefore agree with the Fourth Circuit's description of San Juan Cellular as "merely provid[ing] flexible and versatile guidance in assessing where a particular charge sits on the tax-fee continuum." Norfolk S. Ry. Co. v. City of Roanoke, 916 F.3d 315, 319 n.2 (4th Cir. 2019); see also id. at 326 (Wynn, J., concurring)."

 

NOTE: The large majority of these factors weigh in favor of deeming the RhodeWorks tolls not to be taxes under the TIA. 

 ____________________________

 

TOPIC: THE "SLEEPING ASSESSMENT" ¶ 2.4(g)(5), (10), ¶ 7.10(b)(12)(vi)

 

COLLECTION DUE PROCESS & SUBSEQUENT STATE TAX ASSESSMENT

 

Succession of Ciervo v. Robinson (La. App. 2019)

 

" ... the IRS reported the adjustments to Mr. Ciervo's 2006-2011 federal income tax liability to the LDR. The Succession did not report the adjustments to Mr. Ciervo's 2006-2011 federal tax liability to the LDR, nor did it file amended state returns for 2006-2011 to reflect the adjustments.

 

        On June 26, 2017, based on the IRS report revealing a substantial discrepancy in federal tax liability between what was reported originally by Mr. Ciervo and what was reported on the amended returns, the LDR assessed additional state income tax owed by Mr. Ciervo for the tax years 2006-2011.

 

These LDR assessments, which included tax, interest, and penalties calculated through July 11, 2017, totaled: $242,523.90 for 2006; $262,439.92 for 2007; $220,296.68 for 2008; $82,566.10 for 2009; $47,551.74 for 2010; and $2,612.18 for 2011.

 

ARTICLE: Succession of Ciervo v. Robinson  - Robert J. DavidGainsburgh, Benjamin, David,Meunier & Warshauer, L.L.C

 _____________________

 

COLLECTION DUE PROCESS, ATTACKING TAX LIENS, DISCHARGING TAXES ¶ 2.6(d), ¶ 5.7

 

HELD: IRS LIEN WAS ALLOWED DESPITE THREAT TO TAXPAYER'S EMPLOYMENT.  

 

Brown v. Comm'r (T.C. 2019)     

 

Petitioner filed Federal income tax returns for 2007, 2010, 2011, 2012, and 2014 (years in question) but failed to pay the full amounts of tax shown as due on those returns. The IRS assessed the tax plus interest and additions to tax for failure to pay.

 

As of September 2016, petitioner's outstanding liabilities for the five years in question totaled $18,533. He also had outstanding liabilities for 2006 and 2015, bringing his aggregate unpaid Federal income tax liability to $35,436.

 

In an effort to address these unpaid liabilities petitioner sought an installment agreement. In September 2016 the IRS enrolled him in a partial payment installment agreement (PPIA) calling for payments of $300 per month. But the IRS determined that the filing of an NFTL was necessary because petitioner's unpaid balance of assessments exceeded $10,000. See Internal Revenue Manual, Page 3 (IRM) pt. 5.12.2.6(1) (Oct. 14, 2013). The IRS accordingly filed an NFTL covering the five years in question.

 

On October 4, 2016, the IRS sent petitioner a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing. Petitioner thereafter spoke with an official at the IRS Automated Collection Services (ACS) and represented that he would lose his job if the IRS did not withdraw the NFTL.

 

The ACS official had no authority to withdraw the NFTL, but on the basis of petitioner's representation she said that she would recommend withdrawal. Petitioner subsequently received from the IRS a blank Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien.

______________________

TRAPS FOR THE UNWARY 

    

FROM MORGAN KING'S

 

CHECKLIST OF 51 ISSUES

that may arise 

IN TAX DISCHARGE CASES 

 

References "¶" refer to the corresponding section of King's Discharging Taxes in Consumer Bankruptcy  Cases. TaxPublishing.com

BankruptcyBooks.com 

 

√   TRAP # 44.  "Equitable tolling." A prior bankruptcy may toll the two-year period prescribed at § 523(a)(1)(B)(ii). Putnam v. Internal Revenue Serv. (In re Putnam), 503 B.R. 656 (Bankr. E.D.  N.C., 2014); Ollie-Barnes v.  Internal Revenue Serv. (In re        Ollie-Barnes) (Bankr. M.D.N.C., 2014); In re Spinks, 591 B.R. 113 (Bankr. S.D. Ga., 2018).           

 

Looking at the basics of tax discharge we know that there are "time rules" that, in part, govern tax discharge.

 

These are: the three-year rule per 11 U.S.C. § 507(a)(8)(A)(i), the 240-day rule per 11 U.S.C. § 507(a)(8)(A)(ii), and the 2-year rule per § 523(a)(1)(B)(ii). 

We also know that the 3-year rule and the 240-day rule may be suspended (tolled) by certain events that may stretch out the time, e.g., an offer in compromise, a collection due process appeal, and several other events. The tolling is expressly provided by the Code, namely, 11 U.S.C. 507 11 U.S.C. § 507(a)(1)(G).

 

But, nowhere in the Code will you find language that any event tolls or suspends the running of the 2-year rule, which is that the taxpayer must have filed a valid tax return more than 2 years before the bankruptcy is filed.

 

So, it is often said, nothing tolls the 2-year period.

 

But a short line of cases have held that the 2-year period may be tolled or suspended based on the theory of "equitable tolling." In a nutshell, this theory holds that preventing the tax collector from collecting caused by the debtor's conduct may justify stopping the clock on the 2-years where failure to do so would deny the tax collector a fair shot at collecting.

 

In other words, if the debtor's conduct causes a delay in collecting, it may justify tolling. The facts of the cases suggest that where the debtor's conduct somehow rises to the level of tax evasion or similar conduct, the 2-year period may be tolled.

 

These are fact-intensive issues, and most opinions do not go that far.

 

King's Discharging Taxes in Consumer Bankruptcy Cases,  See ¶ 2.9

COURSES, SEMINARS, AND WEBINARS

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"Outstanding! There are no other courses like this out there!"

- Michael Alfano, Esq.Exeter NH

" ... I am really enjoying the course and wish I would have spent the money on this two years ago when I started rather than various other courses I wasted my money on."

- Chandra Apperson, Esq. Monterey, CA

"Outstanding! Content - great! Visuals are outstanding! Test is good learning device for recall."

- Carol Cross Stone Esq., Long View, TX

"My firm, consisting of myself and my paralegal, decided to do bankruptcies when it became clear that there was a pressing need that was not being served in our community. 

We bought the software and read the books, but then we got our first clients and we went to fill out the petitions and we were lost. Your class saved the day! We filed our first case ever today, a fairly complicated 13, and we did so with confidence thanks to the knowledge we gained from the Bankruptcy Academy. 

 

Your classes took the complicated mass of bankruptcy law and broke it down into manageable chunks."

 - Justin Kallal, Jackson, WY

 CONTENT RICH, EASY TO UNDERSTAND

Every piece of information has been content rich, easy to understand and has allowed me to take the information and apply it to the bankruptcy petitions I am working on right now. 

Understanding the law behind the Bankruptcy Code rules and regulations make a huge difference when preparing petitions. Having the outlines and the practical examples, which take yo u through each schedule step-by-step,  has been invaluable.  

 

I'm stressed because there is lot's I have yet to learn but the course materials have made my life easier.   I really want to get to the hands-on videos.

Jeannie, you did a GREAT JOB putting the course material together with Attorney King.  I am so proud of you!  I have recommended this course to several other VBA's I have spoken with."

- Vivian Little
Certified Bankruptcy Assistant, Chicago, IL

A LOT OF TRAINING!

"Compared to the various seminars / webinars offered by other organizations, the price is a bargain for the large number of hours of training and the additional resources. No matter how you look at it, 12 hours is a lot of training."

- Louise Hurwitz,
Certified NSVBA

 

I LIKE YOUR COURSES!

"I like your courses so much I'[m thinking of signing up all my company's staff for the group class."

- Yordi Fraser, Certified Paralegal, Stamford, CT

"I found the first course very helpful. Although I am not the attorney, I am to be taking on a larger role of managing the BK division at the law firm and due to the number of clients I see on a daily basis, this is something that I find helpful."

- Rob, Sobti Law Group, Beaumont, Orange, and Cornoa, CA

This is a wonderful course!

- Arthur W. Chettle
San Diego, CA

The course has exceeded my expectations so far!!! I already told another attorney about the course.

- Yordi Fraser
Stamford, CT

just finished the first three hours of your on-line course "Discharging  Taxes In Bankruptcy." Also, I finished the first hour of the Certification course.

I am extremely pleased with the content of the course and the way you have presented it. The detailed analysis that you provided in the Discharging Taxes course was absolutely outstanding!! The visual aids were well constructed and very helpful. Next year I will be teaching a course on " Tax Aspects of Bankruptcy" and I intend to use your course and materials for 20 to 25% of this new course that I will be teaching here at the UMKC law school.

I intend to spread the word about the Bankruptcy Academy. I find the content to be invaluable---it is as must for those who intend to practice in this area.

- Professor Ed Hood, University of Missouri-Kansas City School of Law

 

Consumer bankruptcy lawyers all know Morgan King and his Bankruptcy Academy. For years, Morgan has honed his knowledge of discharging taxes in bankruptcy - and his studies have paid off. Morgan's not only one of the smartest tax/bankruptcy guys out there, but he's an incredible teacher. If you've heard him speak at the NACBA conferences you already know what I'm talking about.

- Bankruptcy attorney Jay Fleischman, Brooklyn, NY

This is a must program! In fact, it was so good I'm seeing it again!

- Bankruptcy attorney Antonio Villeda, McAllen,Texas

Both Amy and I thoroughly enjoyed your seminar.  It's the only one I've found that actually allows me to learn something in my chosen field.

- Bankruptcy attorneys N. D.,

Deininger & Wingfield, P.A., Little Rock, Arkansas

I thought I knew the subject. But when I took the Academy I realized how superficial my understanding had been. I left with a new confidence and a new competence I could not have gotten anywhere else.

Bankruptcy attorney Marlow Preston, Austin, Texas

I appreciate the invaluable information you have given other attorneys. As a small (2 person office) it is very difficult to venture outside your comfort zone of area of practice. I cannot thank you enough.

- Bankruptcy attorney Bob Ellis, Columbus Ohio

It was great! I took both factual information and a real sense of confidence from the week. If you plan any seminars regarding other topics, I will be there.

- Bankruptcy attorney Brian Zeiden, Los Angeles, California

This course is a MUST for consumer bankruptcy practitioners. Morgan and his expert speakers and the materials presented, provide excellent guidance and hands-on practical tips and advice that are immediately useful.

- Ellen Stone, Managing Attorney, Law Offices of John Ventura, Brownsville, Texas

I have not seen anyone that provides more information and expertise than you. I am always very impressed with the extent of work, energy and expertise you bring to your seminars.

 

- Bankruptcy attorney Marguerite Kirk, Bedford, TX

. . . the course was excellent and would take it again and bring my associate.  Of course we would prefer to have it in the East, but I did enjoy San Francisco and the restaurant that you recommended.

 

- Bankruptcy attorney Donald G. Koch, New York, NY.

I really enjoyed the program. I learned some new things and it reinforced what I had already learned from your web-site. One thing I'm excited about is that it opened up a prospective market for me that I had not yet recognized. I plan to market my services as a consultant to tax and bankruptcy attorneys in my state. Reading transcripts can be quite complicated for the inexperienced and preparing delinquent returns may sometimes be needed. With your book as a reference I will feel comfortable and conversant when speaking to other professionals.

Thanks for doing what you do. There's a tremendous need for it. I know of several atty's in my area who don't know (enough) about tax discharge. More EA's who practice representation need this knowledge as well. Our clients aren't effectively served if we don't present all their options....and know a bad attorney when we see one.

- Enrolled Agent Lisa Sexton, Carlsbad NM

I just wanted to let you know that I thought your BK academy was terrific and very informative.

- Bankruptcy attorney Martin A. Berger, Hilo, HI

I love your programs. Thanks for supporting the Debtors' bar over the years.

 

- Bankruptcy attorney Steve Berken, Denver, CO

I've enjoyed being in your seminars in the past and have used the valuable knowledge you've imparted from them both in my everyday work and in the books I've contributed ...

- Allan Rosenthal, paralegal, San Francisco CA

 

Morgan King's Bankruptcy Academy offers an absolutely superb bankruptcy course that is second to none. Morgan explains bankruptcy in a detailed concise format that is easily understandable. As an attorney, I deeply appreciate Morgan's years of experience and professionalism, which allows him to fully articulate the nuts and bolts of a Bankruptcy practice. Morgan's course is vital for every bankruptcy attorney who aspires to be the best in his/her field."

- Kelly Finley Nebiolini Esq., California

"Now I can use these deadlines in everyday practice and understand what it means to file before the automatic stay runs out etc without looking like a deer in the headlights."

- Rebecca Watters, paralegal, Orlando, Florida

"I feel so much more confident about taking on bankruptcy cases than before I started the course!"

Jennifer Filla Esq., Colorado Springs, CO

"Without a doubt the most useful legal course I have taken. Find that I am still a bit overwhelmed, difference is I know what needs to get done and in what order. I am very appreciative of the response to my questions and issues along the way. Well done Mr. King."

- Gerald E. Roque, Houston, TX

"Outstanding! There are no other courses like this out there!"

- Michael Alfano, Esq.Exeter NH

" ... I am really enjoying the course and wish I would have spent the money on this two years ago when I started rather than various other courses I wasted my money on."

- Chandra Apperson, Esq. Monterey, CA

"Outstanding! Content - great! Visuals are outstanding! Test is good learning device for recall."

- Carol Cross Stone Esq., Long View, TX

"My firm, consisting of myself and my paralegal, decided to do bankruptcies when it became clear that there was a pressing need that was not being served in our community. 

We bought the software and read the books, but then we got our first clients and we went to fill out the petitions and we were lost. 

Your class saved the day! We filed our first case ever today, a fairly complicated 13, and we did so with confidence thanks to the knowledge we gained from the Bankruptcy Academy. 

Your classes took the complicated mass of bankruptcy law and broke it down into manageable chunks."

 - Justin Kallal, Jackson, WY

 CONTENT RICH, EASY TO UNDERSTAND

Every piece of information has been content rich, easy to understand and has allowed me to take the information and apply it to the bankruptcy petitions I am working on right now. 

Understanding the law behind the Bankruptcy Code rules and regulations make a huge difference when preparing petitions. Having the outlines and the practical examples, which take yo u through each schedule step-by-step,  has been invaluable.  

I'm stressed because there is lot's I have yet to learn but the course materials have made my life easier. I really want to get to the hands-on videos.

 

Jeannie, you did a GREAT JOB putting the course material together with Attorney King.  I am so proud of you!  I have recommended this course to several other VBA's I have spoken with."

- Vivian Little
Certified Bankruptcy Assistant, Chicago, IL

A LOT OF TRAINING!

"Compared to the various seminars / webinars offered by other organizations, the price is a bargain for the large number of hours of training and the additional resources. No matter how you look at it, 12 hours is a lot of training."

Louise Hurwitz,
Certified NSVBA

I LIKE YOUR COURSES!

"I like your courses so much I'[m thinking of signing up all my company's staff for the group class."

Yordi Fraser, Certified Paralegal, Stamford, CT

"I found the first course very helpful. Although I am not the attorney, I am to be taking on a larger role of managing the BK division at the law firm and due to the number of clients I see on a daily basis, this is something that I find helpful."

Rob, Sobti Law Group, Beaumont, Orange, and Cornoa, CA

This is a wonderful course!

Arthur W. Chettle
San Diego, CA

The course has exceeded my expectations so far!!! I already told another attorney about the course.

- Yordi Fraser
Stamford, CT

just finished the first three hours of your on-line course "Discharging  Taxes In Bankruptcy." Also, I finished the first hour of the Certification course.

I am extremely pleased with the content of the course and the way you have presented it. The detailed analysis that you provided in the Discharging Taxes course was absolutely outstanding!! The visual aids were well constructed and very helpful. Next year I will be teaching a course on " Tax Aspects of Bankruptcy" and I intend to use your course and materials for 20 to 25% of this new course that I will be teaching here at the UMKC law school.

I intend to spread the word about the Bankruptcy Academy. I find the content to be invaluable---it is as must for those who intend to practice in this area.

- Professor Ed Hood, University of Missouri-Kansas City School of Law

Consumer bankruptcy lawyers all know Morgan King and his Bankruptcy Academy. For years, Morgan has honed his knowledge of discharging taxes in bankruptcy - and his studies have paid off. Morgan's not only one of the smartest tax/bankruptcy guys out there, but he's an incredible teacher. If you've heard him speak at the NACBA conferences you already know what I'm talking about.

- Bankruptcy attorney Jay Fleischman, Brooklyn, NY

This is a must program! In fact, it was so good I'm seeing it again!

- Bankruptcy attorney Antonio Villeda, McAllen,Texas

Both Amy and I thoroughly enjoyed your seminar.  It's the only one I've found that actually allows me to learn something in my chosen field.

 

- Bankruptcy attorneys N. D., Deininger & Wingfield, P.A., Little Rock, Arkansas

I thought I knew the subject. But when I took the Academy I realized how superficial my understanding had been. I left with a new confidence and a new competence I could not have gotten anywhere else.

Bankruptcy attorney Marlow Preston, Austin, Texas

I appreciate the invaluable information you have given other attorneys. As a small (2 person office) it is very difficult to venture outside your comfort zone of area of practice. I cannot thank you enough.

- Bankruptcy attorney Bob Ellis, Columbus Ohio

It was great! I took both factual information and a real sense of confidence from the week. If you plan any seminars regarding other topics, I will be there.

 

- Bankruptcy attorney Brian Zeiden, Los Angeles, California

This course is a MUST for consumer bankruptcy practitioners. Morgan and his expert speakers and the materials presented, provide excellent guidance and hands-on practical tips and advice that are immediately useful.

- Ellen Stone, Managing Attorney, Law Offices of John Ventura, Brownsville, Texas

I have not seen anyone that provides more information and expertise than you. I am always very impressed with the extent of work, energy and expertise you bring to your seminars.

 

- Bankruptcy attorney Marguerite Kirk, Bedford, TX

. . . the course was excellent and would take it again and bring my associate.  Of course we would prefer to have it in the East, but I did enjoy San Francisco and the restaurant that you recommended.

 

- Bankruptcy attorney Donald G. Koch, New York, NY.

I really enjoyed the program. I learned some new things and it reinforced what I had already learned from your web-site. One thing I'm excited about is that it opened up a prospective market for me that I had not yet recognized. I plan to market my services as a consultant to tax and bankruptcy attorneys in my state. Reading transcripts can be quite complicated for the inexperienced and preparing delinquent returns may sometimes be needed. With your book as a reference I will feel comfortable and conversant when speaking to other professionals.

Thanks for doing what you do. There's a tremendous need for it. I know of several atty's in my area who don't know (enough) about tax discharge. More EA's who practice representation need this knowledge as well. Our clients aren't effectively served if we don't present all their options....and know a bad attorney when we see one.

- Enrolled Agent Lisa Sexton, Carlsbad NM

I just wanted to let you know that I thought your BK academy was terrific and very informative.

 

- Bankruptcy attorney Martin A. Berger, Hilo, HI

 

I love your programs. Thanks for supporting the Debtors' bar over the years.

 

- Bankruptcy attorney Steve Berken, Denver, CO

 

I've enjoyed being in your seminars in the past and have used the valuable knowledge you've imparted from them both in my everyday work and in the books I've contributed ...

 

- Allan Rosenthal, paralegal, San Francisco CA

 

© MORGAN D. KING 2016-20 Technical web advisor Douglas Morrison

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