Letter No. 176 JUNE 18 2020

 

NEWS & EVENTS

 

HERTZ SELLING USED CARS AT BARGAIN PRICES

 

Looking to buy a car? Hertz is selling thousands of used cars in its fleet in bankruptcy at bargain prices

 

Kelly Tyko and Kelly Tyko, USA TODAY

 

Hertz, whose car-rental bands also include Dollar and Thrifty, lost almost all their revenue when travel shut down due to the coronavirus this year. 

 

Weeks after filing for Chapter 11 bankruptcy protection on May 22, car rental company Hertz is selling vehicles in its fleet at discount prices.

 

As of Saturday morning, Hertz had thousands of used cars available on its website HertzCarSales.com. The volume of cars for sale in an area depends on the location used in the search and vehicles are delivered free up to 75 miles.

 

The coronavirus pandemic has forced several companies strained prior to the crisis to file for bankruptcy to try to survive. J.C. Penney, Neiman Marcus, Tuesday Morning are among the chains that filed for bankruptcy since the start of the pandemic. 

 

Hertz competitor Advantage Rent A Car filed for court protection from its creditors May 26.

 

Hertz's current fleet consists of roughly 700,000 rental cars, which have greatly diminished in value due to a sharp drop in used car prices caused by a free fall in auto sales stemming from the pandemic.

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CHAPTER 11 NEED NOT OBTAIN CONSENT OF IMPAIRED CREDITORS

 

The CARES Act has amended the Bankruptcy Code to provide an expedited and easier version of a business bankruptcy proceeding. We now have "Subchapter 5" for small business and individual debtors.

 

This process fulfills a sweet spot for small franchisors and franchisees. It anticipates a Chapter 11 type result, without the administrative headaches and expense, within 90 days of filing.

 

The purpose of this new section of the Bankruptcy Code is to allow business debtors and certain individuals with debts below $ 7.5 Million to reorganize their obligations under in a much less expensive and streamlined manner.

 

Unlike the previous Chapter 11, the Subchapter 5 bankruptcy does not require voting on a plan of reorganization. Instead, like a Chapter 13 wage earner's plan, the debtor's disposable income is used to repay creditors.  

 

This eliminates the need for obtaining the consent of a class of "impaired" creditors as required under basic Chapter 11. It also relaxes some of the rules for administration of the Chapter 11 plan and the payment of United States Trustee quarterly fees.  

 

Certain individual debtors may also benefit from the elimination of the so-called "absolute priority rule" which prevented exemption of real or personal property in some cases.

 

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NACTT 2020 VIRTUAL ONLY ANNUAL CONFERENCE

 

Same GREAT Conference - Online Format

 

"This decision was disappointing for all as we were all looking forward to being in San Diego." Mary Viegelahn, NACTT Program Chair

 

Each session will be released online on the day it was scheduled to be presented in San Diego - July 9-11.  

 

All sessions will be available to watch until August 10th.   If you watch all sessions, it is the equivalent of 23 hours of 45-minute CLE.    The staff track will also be recorded and released in the same format.  

 

CLICK TO REGISTER

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EFFECT OF COVID-19 ON SELF-EMPLOYED 
 

By JEFF LAZERSON | MortgageGrader.com

June 11, 2020 

 

Who cares if it is April, May or December when you make the big bucks from your business and stash the cash in your bank account?  When it came to qualifying for a mortgage, the bottom line always was did your tax returns show you produced enough income to qualify for that loan you were eyeing.

 

Not so much anymore.

 

When Congress enacted Dodd-Frank back in 2010, one of the requirements was your ability to repay the mortgage. The recession triggered by COVID-19 added a new wrinkle to the mortgage qualifying equation. On top of the most recent year or two of tax return income scrutiny, now deposits and interim profits are all the rage.

 

Nearly one in 10 U.S. workers is self-employed, according to the U.S. Bureau of Labor Statistics. If you own 25% or more of a business, you are by mortgage definition, sell-employed.
 

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   HOT & CASES

 

 

 

HELD: BANKRUPTCY CODE TRUMPS ARBITRATION AGREEMENT

 

Belton v. GE Capital Retail Bank, No. 19-648 (2d Cir. 2020)

 

Violation of a bankruptcy court discharge order is not an arbitrable dispute. 

 

The Second Circuit affirmed the district court's order denying appellants' motions to compel arbitration of a dispute with two debtors who previously held credit card accounts managed by appellants. 

 

Appellants argued that debtors were obliged to arbitrate the dispute concerning whether appellants violated the bankruptcy court's discharge orders when they failed to correct the status of debtors' credit card debt on their credit reports. 

 

Though the text and history of the Bankruptcy Code are ambiguous as to whether Congress intended to displace the Federal Arbitration Act in this context, the court held that circuit precedent is clear that the two statutes are in inherent conflict on this issue. 

 

In Anderson v. Credit One Bank, N.A., 884 F.3d 382 (2d Cir.), cert. denied, 139 S. Ct. 144 (2018), the court refused to enforce the parties' arbitration agreement, finding that Congress did not intend for disputes over the violation of a discharge order to be arbitrable.

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HELD: THE TWO-YEAR STATUTE OF LIMITATIONS ON THE TRUSTEE'S ATTEMPT TO AVOID A PREFERENTIAL TRANSFER HAD EXPIRED. AVOIDANCE DENIED

 

Marcus v. Nathan Segal & Co. (In re Las Uvas Valley Dairies) (Bankr. N.M. 2020)  

 

   When courts have allowed trustees to bring avoidance actions after reopening a case, they acknowledge that the other possible limitations periods in §§ 546(a)(1) and 550(f)(1) still apply.  

 

See, e.g., Price, 260 B.R. at 656 ("A reopening of the case, therefore, serves to reopen the limitations period, subject to the other limitations of section 546(a)...and section 550(f)") (emphasis added); Petty, 93 B.R. at 212 ("It is important to note that if the two year limitation provided in § 546(a)(1) had run, the trustee's action would have been barred"); In re Stanke, 41 B.R. 379, 381 (Bankr. W.D. Mo. 1984) ("It is quite another thing if the two year statute has run as that bars an avoiding action even if the case has never been closed.").  

 

To obtain effective relief, Marcus would have to do more than reopen the case-he would have to obtain a court order setting aside the final decree ab initio.   

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HELD: TRUST'S DUTY TO ESTABLISH FRAUDULENT TRANSFER 

 

 Manchester v. Sharpton (In re All Phase Roofing & Const.) (Bankr. W.D. Okla. 2020) 

 

  In order to sustain a cause of action under Section 548(a)(1)(A), a trustee must establish (i) a transfer of an interest of the debtor in property; (ii) made within two years before the debtor filed for bankruptcy; and (iii) done with "actual intent to hinder, delay, or defraud" a creditor. Wagner v. McAnena (In re Vaughan Co.), 2014 WL 3889193, *2 (Bankr. D. N.M. 2014) (citing McHale v. Boulder Capital LLC (In re The 1031 Tax Group, LLC), 439 B.R. 47, 68 (Bankr. S.D. N.Y. 2010)).
 

A trustee's cause of action under Section 548(a)(1)(B) is often referred to as constructive fraud because it omits any element of intent.  

 

To sustain a cause of action for a constructively fraudulent transfer, a trustee must also first establish that there was a transfer of a debtor's property interest within two years prior to the petition date, and then show that the debtor received less than reasonably equivalent value in exchange for the transfer.  

 

Additionally, the trustee must demonstrate that either  

 

(a) the transfer was made when the debtor was insolvent or the debtor became insolvent as a result of such transfer,  

 

(b) the debtor was engaged or about to become engaged in a business or a transaction for which its remaining property represented an unreasonably small capital,  

 

(c) the debtor intended to incur debts beyond its ability to repay them as they matured, or  

 

(d) the debtor made the transfer to or for the benefit of an insider, under an employment contract and not in the ordinary course of business. 11 U.S.C. § 548(a)(1)(B)(ii); Ryan v. Montoya (In re Gonzales), 2011 WL 2619609 (Bankr. D. N.M. 2011).  

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HELD: DEBTOR'S FAILURE TO PRESERVE RECORDS WAS NOT SUFFICIENT TO DENY DISCHARGE 

 

Lashinsky v. Amphone (In re Amphone) (Bankr. Kan. 2020)  

 

"If there was a discharge exception for gambling, this case would be easy-Somphien Amphone wouldn't get one.  

 

"But this case isn't about her imprudent and excessive gambling, her morals, or even whether she committed a fraudulent or deceptive act. Gambling is a legal activity that many states (including Kansas) promote.  

 

"The only questions in this case are whether she kept records appropriate to her circumstances and whether she has sufficiently explained her losses.

 

"If she failed in either endeavor, the UST wins, and she loses her discharge. Lashinsky v. Amphone (In re Amphone) (Bankr. Kan. 2020) 

 

"In § 727(a)(3) actions, the plaintiff must make a prima facie case that the debtor has failed to maintain records.  

 

"If that case is made, the burden of persuasion shifts to the debtor to justify her failure to maintain records "under all the circumstances."  

 

"This provision has been applied differently to debtors depending on their status and sophistication.

 

A sophisticated businessperson might be required to have scrupulous records of profit and loss in her business while an ordinary consumer might not have kept any but the most rudimentary records.

 

A debtor's failure to maintain records must "be justified under all of the circumstances."

 

"If Amphone's record-keeping was inadequate, her justifications for that deficiency must also be considered. Amphone proffered two justifications for failing to maintain contemporaneous gambling

records.   

 

  • "One, she believed she could access records of her gambling activity maintained by the casinos. Her subpoena of those records from the casinos establishes their availability and likely evidences her activity in more detail than any receipts she failed to preserve

  • "Two, she sought to conceal the extent of her gambling from her disapproving husband and family.

 

"The latter justification was persuasive in In re Sauntry.  In that case, the debtor-husband had a gambling addiction and the debtor-wife credibly testified regarding inadequate records due to his active efforts to hide the scope of his gambling and her efforts to control her husband's access to their money by converting the couple to operate on a cash basis.

   

"Amphone's failure to keep her own detailed, daily records of her gambling winnings and losses was justified under the circumstances."  

 

ROOKER FELDMAN

DESPERATE CONSUMER BANKRUPTCY ATTORNEY

 

Rooker  

"The Rock"  

Feldman 

Attorney at Law 

 

 

 

 ROOKER'S MARKETING MISTAKES

  

Over the years, Rooker has tried various marketing methods to promote his practice. And, among those methods, he has made some mistakes.
 

At one time his office was in an urban area that had a fairly large section of town occupied by Asian minorities, including Chinese. In fact, the city had its own "Little Chinatown," its own Chinese newspaper, and a Chinese radio station.

 

He realized he would be making a big mistake not to take advantage of this.

 

So, thinking smart, he placed an ad in the Chinese Yellow Pages, advertising bankruptcy services.

Immediately after the phone book came out, a call came in to the office. Bling, the hot dingbat front desk girl, took the call and buzzed Rooker.

"Mr. Feldman, we have a potential new client calling. Do you want to take the call?"

"Why don't you take a message, I'm in the middle of something."

"OkayFine," replied Bling, with her typical huff.

An hour later Rooker walked out to the front desk and picked up Bling's note on the call. As he looked at it, he realized he couldn't read Bling's handwriting.

"Bling, I can't read your handwriting!"

"I did the best I could."

"What do you mean? Where's the name and phone number?"

"I have no clue," replied Bling. "I couldn't understand a word he said!"

"Bling - for goodness sake, you could have asked him to speak slower!"

"It wouldn't have made any difference."

"Why?"

"Because he was speaking in Chinese!"

In an instant Rocky realized that his entire investment in the Chinese Yellow Pages was a huge mistake. He shrugged his shoulders and returned to his office.

Several months later, he asked his loyal old paralegal, Lou, to place a large ad in the regular Yellow Pages, advertising for personal injury cases.

As the months went by, very few calls came in off the ad. Rooker had glanced at the ad after came it out, and it looked okay to him. It focused on "big rig" accidents, and announced "Rooker "Big Rig" Feldman. When You Need a Big Rig of a Lawyer!"

Rocky got curious about why there were so few calls off the ad. He opened the phone book and turned to his ad.

In large print, it blared "If you've been killed in an accident ..."

He stared briefly in disbelief, and muttered, "Oh, Lou!" and tossed the book in the trash bin.

But Rooker Feldman does not give up easily.

He invested a fair amount of money and time designing a lovely brochure advertising his services for small businesses. It advertised "Partnership Agreements, Incorporation, Small Business Bankruptcy, Tax Relief, Business Litigation, and Business Debt Defense."

But, few calls came in.

So, he did what he probably should have done first ... he hired some bright young folks to call and survey 200 local businesses and try to identify what they last used a lawyer for, and what legal services they thought they might need in the future.

After a week his callers typed up a nice, concise report on their findings, and left it on his desk. When he arrived the next morning, he eagerly studied the report. The results dismayed him.

 

None of the answers mentioned any of the services he was offering!

Rather, what they almost all needed was help collecting receivables! The last time most of them had hired a lawyer they did it to sue customers for unpaid bills.

Rooker realized it was just the opposite of what he was offering ... helping small businesses get out of debt!

Did he want to become a debt collector?

No!

Wistfully, he tossed the report back on his desk, leaned back in his expensive leather chair, and gazed out the window ... the portal to his spirit cave. Sighing deeply, he lit up a Macanudo Prince Phillipe.

World without end.

Amen. 

Hotwire # 172 MAY 16 2020

 

WHAT THEY'RE SAYING 

   

Morgan King is a TITAN in his field.

 

- Phil Rosenthal, CEO FastCase

 

IRS NEWS RELEASE

 

IRS People First Initiative provides relief to taxpayers facing COVID-19 issues

 

By Internal Revenue Service

May 15, 2020

 

Due to COVID-19, the IRS' People First Initiative provides relief to taxpayers on a variety of issues from easing payment guidelines to delaying compliance actions. This relief is effective through the filing and payment deadline, Wednesday, July 15, 2020.

  • Existing Installment Agreements - Under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are delayed. Those currently unable to meet the terms of an Installment Payment Agreement or Direct Deposit Installment Agreement may cancel payments during this period with no default. By law, interest will continue to accumulate on any unpaid balances.

  • New Installment Agreements - People who can't pay all their federal taxes can establish a monthly payment agreement.

  • Pending Offer in Compromise applications - Taxpayers have until July 15, 2020, to provide additional information for a pending OIC. The agency generally won't close any pending OIC request before July 15 without the taxpayer's consent.

  • OIC payments - Taxpayers can delay all payments on accepted OICs until July 15, 2020. Interest may accrue, and missed payments are due when the suspension period ends. Taxpayers can call the number on their acceptance letter to address their needs.

 

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CASE HOTWIRE

 

SERIAL FILING AND EQUITABLE TOLLING IN CHAPTER 13

 

Court denies objection to IRS priority tax claim

Conversion of case changes the applicable filing date.

 

In re Ford (Bankr. E.D. N.C. 2020)

 

The debtors filed a chapter 13 on Nov. 5 2014, that was converted to chapter 7 on July 2016. In between, the IRS assessed income taxes for tax year 2014.

 

The chapter 7 discharge was entered Jan. 26 2017. The IRS and debtors agreed that the tax was a post-petition claim.  

 

Debtors filed a second chapter 13 on Dec. 18, 2019, less than 3 years after the prior discharge and more than 3 years from the assessment. The debtor objected on the basis that the second chapter 13 was filed more than 3 years before the second chapter 13 filing. The IRS argued that it was prevented from collecting the taxes due to the automatic stay of the first chapter 13, and hence equitable tolling should apply.

 

The opinion first looked at the time-periods between filings for eligibility of discharge, under 11 U.S.C. § 1328(f) that addresses eligibility for discharge in a subsequent chapter 13 filing. The court looked at whether the statute refers to the date the prior case was filed, versus the date of the prior discharge, and the effect of conversion, per 11 U.S.C. § 348(a). The court concluded the effective date contemplated by § 1328(f)(1) was the date of the prior discharge.  

 

The argument addressed conversion, stating "§ 348 intervenes to require that conversion changes the chapter that it is deemed filed under;" (cites) "Converting a case from chapter 13 to chapter 7 causes the case to be one that is filed under chapter 7 on the same date the chapter 13 was filed."

 

But, since under this analysis the debtors filed case no. 2 more than four years after case no. 1, hence, a discharge was allowable.

 

But that did not end the analysis relevant to the tax claims.

 

The court addressed the tolling periods of the added paragraph to 11 U.S.C. § 507(a)(8)(G) that, among other things, added 90 days to the tolling period. Considering the concepts of equitable tolling and section 507(a)(8)(G) the court concluded that the IRS had been prevented from collection, and hence the 3-year discharge time period had not expired.

 

The opinion concludes;

 

" ... the holding is in line with public policy. To rule otherwise would essentially allow a taxpayer to discharge tax liability by invoking the bankruptcy protection until the three-year lookback period has expired and then taking a dismissal.  

 

"For the same reasons identified in Young, equitable tolling of the three-year lookback period in this matter is appropriate during all periods of a bankruptcy proceeding in which the IRS is prevented by the automatic stay from collecting the tax debt.  

 

"A debtor cannot be rewarded by gaming the Bankruptcy Code to restrain collection activity while the clock runs out on the tax collector."

 

ed. note: the editor does not understand why the discussion of equitable tolling was necessary, because the added paragraph to 11 U.S.C. § 507(a)(8)(G) seems clear. 

TRAPS FOR THE UNWARY

√  11. Incorrect calendar calculation of the three time periods; Debtor's counsel filed thebankruptcy just one day short of the satisfaction date for the 3-year time rule.

Elkins v. IRS 369 B.R. 741 (Bankr. S.D. Ga. 2007) . See ¶ 2.4(d) et. seq.

When in doubt consider using an online bankruptcy transcript analysis service[2] 

However, such a service may not be able to correctly determine subjective factors in the case such as, was the tax return fraudulent? Is the client's conduct in failing to pay the taxes indicative of a willful attempt to evade the taxes? 11 U.S.C. § 523(a)(1)(C).  

 

When calculating the 3-year period, failing to consider when due date for return may land on weekend or holiday. Where April 15 lands on a weekend or holiday, due date is extended to next business day.  

 

See In re Hammerer, 18 B.R. 524 (Bkrtcy.E.D.Wis. 1982).  See ¶ 2.4(e).

IRS waives failure-to-deposit penalties during pandemic

By Sally P. Schreiber, J.D. April 1, 2020

To allow employers to take immediate advantage of various credits enacted in response to the COVID-19 pandemic and to ease employers' cash flow, the IRS is permitting eligible employers who pay qualifying wages to retain an amount of the payroll taxes equal to the amount of qualifying wages that they paid, rather than deposit them with the IRS.

To make this possible, the IRS announced Tuesday it is waiving additions to tax under Sec. 6656 for failure to make a deposit of employment taxes (including withheld income taxes, taxes under the Federal Insurance

Contributions Act, and taxes under the Railroad Retirement Tax Act) related to the new credits (Notice 2020-22).

The waiver will apply to the extent that the amounts not deposited are equal to or less than the amount of refundable tax credits to which the employer is entitled under the Families First Coronavirus Response Act (Families First Act), P.L. 116-127 (the credits for qualified sick leave wages, qualified family leave wages, and qualified health plan expenses allocable to qualified leave wages) and under the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, P.L.116-36 (the credit for qualified employee retention wages).

The waiver will also apply to -

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IRS NOTICE 2020-22

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IRS ANNOUNCES EXPANDED TAX FILING RELIEF

IRS NOTICE N-2020-23

Expanded Federal tax filing and payment relief on account of Coronavirus Disease 2019 (COVID-19) emergency.

The Treasury Department and IRS are providing additional relief to taxpayers, postponing until July 15, 2020, a variety of tax form filings and payment obligations that are due between April 1, 2020 and July 15, 2020.

 

Associated interest, additions to tax, and penalties for late filing or late payment will be suspended until July 15, 2020. Additional time to perform certain time-sensitive actions during this period is also provided.

This notice also postpones due dates with respect to certain government acts and postpones the application date to participate in the Annual Filing Season Program.

 

This notice expands upon the relief provided in Notice 2020-18, issued March 20, 2020, and Notice 2020-20, issued March 27, 2020.

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Taxpayer Assistance Center Statement
 

IRS has temporarily closed all Taxpayer Assistance Centers

 

March 20, 2020

As the COVID-19 coronavirus crisis continues to develop, the IRS is taking multiple steps to protect our employees, America's taxpayers, communities and our partners.

In response to the national emergency, the IRS has temporarily closed all Taxpayer Assistance Centers and discontinued face-to-face service throughout the country until further notice.

The IRS is continuing to process tax returns, issue refunds and help taxpayers to the greatest extent possible.

Taxpayers are highly encouraged to go to IRS.gov and to the newly created IRS.gov/coronavirus webpage where they can find the latest updates about IRS services, explore free options to file or request an extension to file at www.IRS.gov/freefile, find forms, tax help, refund status and payment options.

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TAXPAYER ADVOCATE SERVICE PHONE HELP REMAINS OPEN

COVID-19 Update April 9 2020

The Taxpayer Advocate Service (TAS) wants you to know that the safety and concern for our taxpayers and employees continues to be our highest priority.

 

Currently, TAS remains open to receive phone calls at the local phone numbers listed here, but due to the coronavirus TAS is suspending walk-in services until further notice.

If you have an open TAS case and need assistance, please reach out to your assigned Case Advocate by phone. If you are having a tax problem and have not been able to resolve it directly with the IRS, you can call your local taxpayer advocate.

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IRS STAFF REDUCES PROCESSING STAFF

Eric Katz
Senior Correspondent govexec.com
April 1, 2020

Thousands of IRS Employees Are Currently Home With Pay, But Not Working

Agency faces major logistical challenges after massive stimulus package, but union says tens of thousands of employees cannot work remotely.

As the Internal Revenue Service prepares for a delayed tax season, delivering stimulus checks to millions of Americans and other new mandates in response to the novel coronavirus pandemic, a large swath of its workforce is home and not working while receiving normal pay.

Employees first began streaming out of their offices due to state-based stay- at-home orders. In Pennsylvania, for example, Gov. Tom Wolf, D, issued such a declaration for parts of his state last week, leading to most employees there being ordered home.

IRS Commissioner Charles Rettig followed that up several days later with a mandatory evacuation order, sending home virtually all of the agency's 74,000 employees. The order enabled the agency to require all employees who could telework to do so.

That left many employees, however, unable to work, as they do not possess telework capacity. One Pittsburgh-based IRS employee told Government Executive he has been home on a form of administrative leave known as "weather and safety leave" since March 20.

He is willing and able to work remotely, but his call center does not have laptops available to make that possible. IRS on Monday asked the employee to voluntarily telework and he agreed, but he has "no idea what the timeframe is for receiving a laptop which is required."

"We are being paid basically to sit at home," said the employee, who works in a call center with 400 colleagues. "I volunteered to telework, which means if I ever get a laptop, I will actually be able to work from home and actually earn the money that I'm already receiving for nothing."

According to Tony Reardon, president of the National Treasury Employees Union, just 44% of the IRS workforce is currently telework eligible and required to work.

 

That would mean most of the remaining 41,000 employees are currently being paid not to work ...

 

ed. note: Does this mean tax collection activities such as levy collection have been suspended or reduced for the time being?

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NEW TAXPAYER ADVOCATE ANNOUNCED

March 27, 2020

Longtime tax pro Erin Collins begins as new National Taxpayer Advocate; Collins takes on job early to help with COVID-19 response

WASHINGTON - The Internal Revenue Service today announced Erin M. Collins will start her term as the National Taxpayer Advocate (NTA) on Monday, March 30, and lead the Taxpayer Advocate Service, an independent organization within the IRS.

The Advocate is a critical position inside the IRS, leading the Taxpayer Advocate Service and serving as a voice for taxpayers inside the IRS as well as being a senior adviser to IRS leadership.

 

The NTA also reports to Congress on areas of the tax law that impose significant burdens on taxpayers or the IRS, including recommending potential legislative changes.

"Collins is an excellent choice for this key position because she is familiar with tax issues from inside and outside the IRS," said IRS Commissioner Charles Rettig. "The IRS leadership team and I look forward to a meaningful, productive working relationship with Collins and the Taxpayer Advocate Service to help improve our tax system for everyone."

"I will be starting my position as the National Taxpayer Advocate earlier than originally planned due to the recent national emergency," Collins said. "I can't imagine a more critical time to lead the Taxpayer Advocate Service and to help the nation's taxpayers during this time."

Treasury Secretary Steven Mnuchin appointed Collins on February 27, 2020, to replace Nina Olson, who left the office in July 2019 after serving more than 18 years.

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IRS REPORT - PRIVATE DEBT COLLECTION OF TAXES

Private Tax Debt Collectors Show Progress

According to the latest data, the IRS is finally putting a dent in the estimated $441 billion "tax gap" through its private debt collection program. But there's still a long way-a very long way- to go.

By Ken Berry, J.D. - CPA Practice Advisor Tax Correspondent Jan 23rd, 2020

According to the latest data, the IRS is finally putting a dent in the estimated $441 billion "tax gap" through its private debt collection program. But there's still a long way-a very long way- to go.

The figures released for Fiscal Year 2109 (FY2109) show that the four private collection firms used by the IRS to secure payments from tax debtors-CBE, ConServe, Performant and Pioneer (a subsidiary of the student loan servicer Navient)-hauled in $213 million, a major jump over the prior two years.

For FY2018, the private collectors amassed $82 million while only $6.5 million was collected in FY2017.

Even after you subtract commissions and costs, the IRS netted a cool $170 million.

The new private debt collection program, which was authorized by a highway spending measure in 2015, is proving to be more successful than two previous efforts by the IRS.

 

The agency was forced to shutter operations in the past after it figured out it was spending more than it was bringing in.

Nevertheless, $170 million is a mere drop in the bucket of what the IRS is still owed. And some detractors have complained about strong-arm tactics used by the private tax debt collectors.

 

Finally, the program has been criticized for targeting mostly low-income taxpayers. These are the individuals who face the greatest hardships when paying off their tax debts.

It's also been suggested that the IRS could take an even bigger bite out of the tax gap by going after the upper crust.

Currently, the program allows the IRS to use private collectors for collection of your unpaid tax liability if one of the following criteria is met:

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HOT & IMPORTANT CASES

 

HELD: "DUE PROCESS" APPLIES TO STATE AND CITY TAXES AS WELL AS IRS

Coxe Prop. Mgmt. & Leasing v. City of New Orleans (4th Circ. April 8 2020)

Professionals who deal in delinquent taxes, and in particular, IRS taxes, frequently refer to the IRS Collection Due Process Appeals Act.

However, this case points out that while a non-IRS taxing entity may not have explicitly adopted the IRS statute, the concept of due process applies to their taxes as well, and is typically found in local statutes:

"Appellant operated a business in Orleans Parish. The City of New Orleans conducted an audit and determined that Appellant failed to pay occupational license taxes to the City of New Orleans in the following calendar years: 2015, 2016, 2017, and 2018.

"The City of New Orleans assessed Appellant and ultimately issued a Warrant of Distraint. Rather than contest the amount or tender payment under protest, Appellant filed a petition for damages, request for a temporary restraining order, and request for writ of mandamus.

"The trial court denied relief for all of the summary proceedings. It is from this denial that Appellant appeals. For the reasons that follow, we affirm the trial court.

"With regard to procedural due process, "[i]t is well-settled that, under the Fourteenth Amendment to the United States Constitution and La. Const. art. I, § 2, deprivation of property by adjudication must be preceded by notice and opportunity to be heard appropriate to the nature of the case." Cent. Properties v. Fairway Gardenhomes, LLC, 2016-1855, p. 8 (La. 6/27/17); 225 So.3d 441, 447."

In this case, holding against the taxpayer, the court cited state tax procedure statutes:

"Pursuant to La. R.S. 47:337.48(A)(1), in pertinent part, upon a taxpayer's failure to remit appropriate taxes, the tax "collector shall determine the tax, penalty, and interest due by estimate or otherwise" and then "shall send by mail a notice to the taxpayer . . ." to inform the taxpayer of the purpose and amount of the assessment.

"In the instant matter, the City complied with the mandates of both procedural due process, as well as the aforesaid statute and provided such notice to Appellant.

"The City sent Appellant two notices, one was dated November 30, 2018, and the second was dated December 19, 2018. Coxe Prop. Mgmt. & Leasing v. City of New Orleans (La. App. 2020)."

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11th CIRCUIT DEFINITIVELY REJECTS McCOY!

The first circuit to clearly reject the late-filed-return rule!

Massachusetts Department of Revenue v. Shek (11th Cir. 2020)

Until this month, only three federal circuits had ruled definitively on the "McCoy" rule, sometimes called the "McCoy Test," as law governing whether a late-filed tax return could be a valid tax return for purposes of 11 U.S.C. § 523(a)(1)(B)(ii) (see text of King's book, ¶ 2.4(f)).

 

The rule, in a nutshell, is that if the tax return is filed late it is not (and can never be) a valid tax return for discharge purposes. The rule comes from McCoy v. Mississippi State Tax Commission.

Those three circuits, the 1st, 5th, and 10th, adopted the rule, thus barring any taxpayer from discharge of taxes if the taxpayer filed his or her 1040 or state tax return after the due date.

Although numerous individual courts in other circuits have rejected the rule, no circuit opinion had done so.

Some other individual courts not within those circuits have adopted McCoy. Individual courts following McCoy include Kline v. Internal Revenue Service 581 B.R. 597 (Bankr. W.D. Ark. 2018) - 8th Cir.; Shinn v. Internal Revenue Serv. (In re Shinn) (Bankr. C.D. Ill. 2012) - 7th Cir.; In re Perry (Bankr. M.D. Ala. 2012) - 11th Cir.; Nedelka v. Internal Revenue Serv. (In re Nedelka), 595 B.R. 449 (Bankr. Del. 2018) - 3rd Cir.

Finally, this month, the court in Massachusetts Department of Revenue v. Shek, unequivocally rejected that rule and tacitly adopted the "Beard" rule (the Beard rule ... the court will take into consideration the facts and circumstances that may justify late-filing).

In my opinion, the Shek opinion is the best written and reasoned analysis of the issues raised by the ruling in McCoy v. Mississippi State Tax Commission, 5th Cir. 2012) ruling and I recommend that it be read by all tax/bankruptcy professionals.

The opinion addresses a number of issues, all of which arise from the basic question, is a tax return filed late always to be deemed invalid?

(note: although both McCoy and the current opinion in Shek deal with state income taxes, the issues are identical when applied to federal income taxes).

Issue No. 1 - the statutory text on which McCoy and its progeny are based is the language added by the Bankruptcy Abuse and Consumer Protection Act of 2005 ("BAPCPA") to 11 U.S.C. § 523(a)(1)(19)(*) which specifies

that for purposes of the two-year rule expressed at § 523(a)(1) (B)(ii), specifically, that to be a "return" it must comply with "applicable filing requirements."

The courts in the 1st, 5th, and 10th circuits (as well as some individual courts in other circuits) have interpreted this language to mean that the return must have been timely filed, i.e., not filed late.

The Shek opinion addresses the meaning of the term "applicable" in that context, and concludes that the inclusion of that qualifying phrase clearly indicates that not all filing requirements must be satisfied to be a valid return, and that in the overall context of the language governing tax returns, timely filing is not a prerequisite to a finding that it is a tax return.

Had Congress' intention in drafting the phrase "applicable filing requirements" been to include all filing requirements, the word applicable serves no purpose, and the text could have and should have been, simply, "filing requirements."

 

By including the qualifying word, it is clear that only those filing requirements that non-bankruptcy law require for the document to be deemed valid are to be considered.

The opinion looks at this question from several directions, and points out that, under clearly established rules of statutory interpretation, if the inclusion of the words "applicable filing requirements" were meant to mean that any late- filed return was invalid, it essentially renders the language of § 523(a)(1)(B)(ii) meaningless ... that text excludes any return filed within two years of the bankruptcy filing and provides that such a return is invalid ... which clearly implies that a return filed more than two years before the petition is filed may be valid.

"DOR's proposed interpretation would render the dischargeability limitation in § 523(a)(1)(B)(ii) insignificant. Section 523(a)(1)(B)(ii) would only limit discharge of returns filed under § 6020(a) or a related state or local provision.

 

And it would only bar discharge of such returns of taxpayers with respect to whom bankruptcy was filed within two years of the filing of the late return.

"Section 523(a)(1)(B)(ii) would therefore operate only on a subset of an already "minute" set of tax returns. In all other circumstances, it would be completely irrelevant, despite its facially broad language.

 

Relegating § 523(a)(1)(B)(ii) to insignificance would run counter to the Supreme Court's consistent refusal to construe statutes "in a manner that renders [them] entirely superfluous in all but the most unusual circumstances." Roberts v. Sea-Land Servs, Inc., 566 U.S. 93, 103, 132 S. Ct. 1350, 1358 (2012)."

Issue No 2 - is there a difference between state and federal requirements that must be satisfied for the document to be deemed a valid return?

When looking at a case involving state, as opposed to federal, taxes, one must look to the tax statutes of the particular state to determine what filing requirements must be satisfied for the document to be valid under the respective state's tax laws.

In this case, the opinion looks carefully at the language of the tax laws of the state of Massachusetts and concludes that those statutes do not require that a return be timely filed to be deemed valid.

Issue No. 3 - drastic change in bankruptcy law.

The opinion points out that part of the difficulty of interpreting the language "applicable filing requirements" is that there is virtually no legislative history to cite to determine congressional intent.

But the lack of evidence of congressional intent in connection with how the phrase is to be interpreted is cited by the Shek court in favor of the rejection of the McCoy rule, because the rule as applied in the 1st, 5th and 10th circuits represents a substantial change in the right of a substantial number of taxpayers to discharge their delinquent taxes ... and any such change can only be justified by reference to congressional intent:

"Our understanding of how Congress drafts statutes also accords with the Supreme Court's instructions that we attempt, where possible, to interpret the Bankruptcy Code post-BAPCPA harmoniously with pre-BAPCPA practice. See Hamilton v. Lanning, 560 U.S. 505, 517, 130 S.Ct. 2464, 2473 (2010) ("Pre-BAPCPA bankruptcy practice is telling because we will not read the Bankruptcy Code to erode past bankruptcy practice absent a clear indication that Congress intended such a departure.").

"We do not think it is likely that Congress would significantly curtail the set of dischargeable returns so starkly without a clearer indication that it was indeed intending to do so."

Issue no. 4 Bankruptcy policy favors the debtor


Finally, the opinion concludes by reiterating well-known policy applying

Bankruptcy law to debtors' rights ...

"Lastly, we note that our interpretation of the hanging paragraph is in harmony with the principle that "exceptions to discharge should be confined to those plainly expressed." Kawaauhau v. Geiger, 523 U.S. 57, 58, 118 S.Ct. 974, 977 (1998).

"In addition, we have noted in the past that we should, where possible, construe exceptions to discharge "in favor of the debtor, and recognize that the reasons for denying a discharge must be real and substantial, not merely technical and conjectural." In re Miller, 39 F.3d 301, 304 (11th Cir. 1994)"

____________________________

HELD: DEBTOR GUILTY OF ATTEMPT TO EVADE TAX

United States of America v. Harold (Bankr. E.D. Michigan 2020)

The debtor was accused of willful attempt to evade or defeat the tax resulting in non-dischargeability of taxes, interest and penalties. The court found her guilty pursuant to 11 U.S.C. § 523(a)(1)(C) based on both prepetition and postpetition conduct.

(ed. note: I addressed an earlier opinion in the same case that dealt with entirely separate issues in Tax Hotwire # 109 2019).

The debtor was a successful, high-income doctor specializing in obstetrics and gynecology. Her litany of prepetition conduct activities evidencing willful attempt to evade the tax included, inter alia -

Lavish lifestyle:

  • Purchased an expensive river waterfront home

  • Sent children to private schools and private colleges

  • Took expensive vacations to Mexico, Alaska, Paris, Dubai, et al. Bought expensive cars - Jaguar, Cadillacs, Lincolns, Lexus and Harley Davidson motorcycle

  • Went on numerous "Golf junkets"

  • Charity

(ed. note: this long list of lifestyle evidence is very similar to the list discussed in the case In re Conrad, addressed in Hotwire # 12, 2018).

Although the debtor let her husband handle all of her tax matters, she was fully aware that taxes were not being paid. The court also found her to be " ... a well- educated, intelligent, successful doctor whose decisions in all aspects of her life struck the Court as deliberate and well-informed."

 

She had, as well, entered into a prepetition installment agreement which she subsequently failed to maintain.

Prepetition conduct involved a complicated set of real estate maneuvers, deed transfers, and attempts to conceal her interests in property for the admitted purpose of avoiding payment of taxes.

In finding her guilty the opinion reiterates several principals of law governing the issues:

Section 523 "includes both acts of commission and acts of omission."

"has a conduct requirement and a mental state requirement."

The section includes attempts to evade both the assessment of a tax and the collection of a tax (citing In re Gardner, 360 F.3d 551 (6th Cir. 2004).

Harold at P. 36:

" ... § 523(a)(1)(C) does not require a showing of fraud to make a tax debt nondischargeable. It requires only a finding that a debtor has willfully attempted in any manner to evade or defeat a tax.

 

"By her voluntary, conscious and intentional choices to pay enormous amounts of non- essential discretionary expenses - all the while knowing she was not paying her taxes - and by arranging the SWEWAT sale to try to end run the IRS, the Debtor willfully attempted to evade and defeat payment of her tax debt to the IRS."

ed. note: Evade assessment, or evade payment?

The question has arisen in some cases whether the offense included attempted evasion of only the assessment, or only the payment of a tax, or both.

 

However, this question has been largely settled in favor of the rule that both attempted evasion of assessment as well as evasion of the payment of a tax are included. See, e.g., Obinwa v. U.S. Internal Revenue Serv. (In re Obinwa) (Bankr. M.D. Fla. 2012):

"At one point in time, courts were only concerned a debtor's attempt to evade tax assessment,55 but § 523(a)(1)(C) now "precludes the discharge when the debtor 'willfully attempted to evade or defeat' a tax at the payment stage, just as surely as it does where the attempted evasion occurs at the assessment stage."

FROM MORGAN KING'S

CHECKLIST OF 52 

TRAPS & OPPORTUNITIES

IN TAX DISCHARGE CASES 

 

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

  

√ 52. Always treating a lien for tax penalties as secured

The IRS or state taxing agency sometimes files a proof of claim listing the entire tax liability as secured, which presumably includes the portion for the penalties. This may arise where the taxing entity has recorded a lien for the liabilities.  

                  

However, the majority rule (although not entirely settled) is that penalties should not be deemed secured, notwithstanding a valid tax lien which includes the penalties has been filed.

 

The rationale is, typically, that to do so would punish the general unsecured creditors for the debtor's bad conduct (i.e., whatever it was that triggered the penalty).

See, e.g., In re Merwede, 84 B.R. 11 (Bankr. Conn. 1988);
In re Brentwood, 134 B.R. 267 (Bankr. M.D. Tenn. 1991);
In re Quality Sign Co. Inc. 51 B.R. 351 (Bankr. S.D. Ind. 1985).

WHAT THEY SAY ABOUT OUR BOOKS & PUBLICATIONS

 

BANKRUPTCY & TAX PUBLICATIONS

"Morgan, so many of us look up to you in our BK practices. You have really set a high bar for the rest of us! Thank you and congratulations on many fronts!"

- John Gist, Esq. California Bar, 2020

"There was the Fees & Ethics thumb drive. Thank you so much. I brought it in and started looking at it. Right off the bat, in the Preface it lists exactly what needs to be focused on. Great!"

- Madeline McIntosh, Esq. Texas Bar, 2020

 

"Thank you very much for sending that publication. It is an excellent set of materials ..."

- Wayne E. Johnson, Los Angeles, CA 1998 (appointed judge of the bankruptcy court, Central District, CA.  2011)

 

"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.

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Cadillac, MI 2019

_______________

 

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Woodstock, Georgia

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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!

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____________

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

__________

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!

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__________

 

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

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__________

 

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

__________

 

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

__________

 

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

__________

 

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

__________

 

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

__________

 

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.

__________

 

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

- Kenneth S. Rappaport, Boca Raton, FL

__________

 

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.

 

 What they say about
King's Guide to Practice Under
The Bankruptcy Reform Act of 2005

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- Steven R. Zweigart, Flemingsburg, Kentucky  July 7 2008

 "I just submitted an online order.  Anything you can do to get it to me as soon as possible would be greatly appreciated. I do not feel comfortable starting to practice under the new law w/out reading your Guide, et al first. Thanks for all you're doing for bk practitioners"

 

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- Jordan Rappaport, Boca Tatan, FL.

 

"I don't want to fall behind in the new world of BAPCPA and, accordingly, go to the "master" to get my information which is always concise and well written. I, and many other practitioners, sincerely appreciate your publications and efforts."

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- Gary R. Fraley, Sacramento, CA

 

__________

 

"Kings Guide to BAPCPA has proven itself to be the most valuable resource in the office. Although I have taken 4 CLE courses to prep. for 10/17/05 and its aftermath,the book anticipated many of the rulings now coming down."

- William Wolfson, Flemington, NJ

 

"Your materials are essential to the practice of bankruptcy law under BAPCPA."

 

- Robert W. Raley, Bossier City, LA

__________

 

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__________

 

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"I received it today and began reading immediately. It is a wonderful manual and wish I had the foresight to have ordered it earlier."

​David Zaffina, Hazel Park, MI

__________

"I have been a practicing consumer bankruptcy lawyer for almost 20 years.  When the 2005 BAPCPA law was enacted, I had almost come to the conclusion that my bankruptcy practice was over - the text of the new law is confusing, contradictory and often internally inconsistent.

 

Morgan King's Guide to the 2005 BAPCPA is the main reason I am still in practice. Mr. King's Guide offers a step by step, practical roadmap for practice under the new laws.  I refer to it constantly.  

 

I cannot see how any consumer bankruptcy law practitioner could possibly navigate the minefield of post-BAPCPA practice without this Guide.  It contains checklists, spreadsheets, client handouts and substantive comment.  I frequently teach continuing education seminars about bankruptcy to other lawyers and my first recommendation is to purchase Mr. King's Guide."

 - Jonathan Ginsberg, Atlanta, GA."

__________

 

"King's Manual is a must. I read it cover to cover and should probably do it again." -

- David Shaev, N.Y., N.Y.

__________

 

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- Milton D. Jones, Morrow, GA.

_________

 

"The book really has saved me."

 -Ron Satija, Austin, TX

__________

 

"If you could, please overnight them!  I have heard rave reviews from the folks on the NACBA list and I really could use all the help I can get with this new freaking law.. I have a few post-BARF cases I am starting to work on and I would 'prefer' not to screw up on my first filings."

- Shannon Foster, West Chester, PA

__________

 

"I have yet to see anyone but you offer a good guide on how to gear up for the new law. I bought yours and thought it was very good, and have probably sold at least 5-10 via my endorsements and recommendations."

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__________

 

"The book removes the fear . . . you've truly written a map. There's little left to chance. With the checklists and outlines, it's pretty difficult to miss something important and that provides a needed level of comfort."

 

- Adam Schachter, Houston, TX

__________

"Morgan King (not-related and I don't get a commission) has put together an extremely useful guide to practice under the new law. It includes all kinds of wonderful checklists, sample agreements for services, sample handouts and other materials. And pretty much walks you through everything you need to do to be ready to practice under the new law.  It costs a little less than $200 I think and is worth every penny of it. I commend it to your attention."

- Jerry Harper, Topeka, KS

 

"The "Guide to Practice" under BARF is a terrific book, very helpful, lots of checklists and suggestions, flow charts, etc."

 

- D. Jacobs, Chico Ca.

 

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"The binder has been extremely informative in describing the drastic changes that will soon occur. I am glad that we purchased this binder."

- N. Siegel, Santa Ana, CAƒ

 

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- S. Lanin, NY NY

 

"... text seems very comprehensive and helpful."

 

- M. Gunnar, Hilliard, OH

 

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G. Heck, New London, Connecticut

 

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-  Roger Cotner, Grand Haven, MI

 

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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?

  • Barton doctrine Is there immunity?

  • 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 approval to sue the trustee in 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 suing in rem versus in personam.

___________________

 

QUESTIONS - REMARKS - SUGGESTIONS

CLICK HERE TO SUBMIT YOUR QUESTIONS - REMARKS - SUGGESTIONS

Morgan@MorganKing.com

 
 

LETTER NO. 173

 

WHAT THEY SAY ABOUT THE FUNDAMENTALS COURSE

About King's 35-hour course, Fundamentals:

 

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

           - Carol Cross Stone Esq., Long View, TX

CASE HOTWIRE

HELD:  CHAPTER 13 PLAN REQUIRES A "DEFINITE" PERIOD OF TIME PURSUANT TO LOCAL RULES 

 

 In re Escarcega, 573 B.R. 219 (B.A.P. 9th Cir. 2017)   

 

"These cases, taken together, establish that Debtors' plans must specify a length and cannot contain provisions which essentially amount to plan modifications shortening that length without complying with the procedural requirements of § 1329 and without obtaining a court order."

 

HELD: CHAPTER 13 PLAN NEED NOT HAVE A "DEFINITE" PERIOD OF TIME 

  

In re Flinn (Bankr. Kan. 2020)   

 

"Nothing in the Code demands it be a whole number. One certainly couldn't logically argue that the words "a longer period" as found in § 1322(d) and § 1329(c) by themselves dictate that said period be a definite number of months or years. Rather, the period can be "longer" than three years but not more than five." 

 

______________________________

 

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

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COURSES, SEMINARS, AND WEBINARS

I have been to many of  your seminars.  I figure you are great and you have taught me more than any other course or seminar.

 

I will definitely want to take your 3-day course over.   I even have a few ugly IRS cases to review at seminar.

 

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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."

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Houston, TX

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"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."

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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."

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Certified Bankruptcy Assistant, Chicago, IL

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Certified NSVBA

 

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San Diego, CA

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

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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.

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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.

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- 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

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. . . 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.

 

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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.

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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 ...

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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 2016-2020 Technical web advisor Douglas Morrison

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