The U.S. Constitution grants Congress authority to enact federal bankruptcy laws. The Bankruptcy Act of 1898 formed the basis of federal bankruptcy law. The Bankruptcy Act was repealed by the Bankruptcy Reform Act of 1978, which codified the new law in title 11 of the United States Code as the Bankruptcy Code. Effective in 1979, the Bankruptcy Code made the bankruptcy process less burdensome for the debtor. The Bankruptcy Reform Act of 1994 (BRA 94) brought about a major amendment to the Bankruptcy Code affecting the government's treatment of debtors, notably granting permission to assess taxes while the debtor is under the protection of the automatic stay.

On April 20, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was signed into law. Most of the provisions of this act became effective October 17, 2005, although some provisions, such as those dealing with Chapter 12 bankruptcies, were effective upon the date of enactment.

When a debtor files a petition in bankruptcy court an injunction referred to as the automatic stay arises by operation of bankruptcy law (11 USC § 362). The automatic stay is effective as of the bankruptcy petition date. It is a prohibition on the commencement or continuation of any legal or enforcement activities against the debtor, the debtor's property, and property of the estate (subject to certain exceptions). Any willful violation of the stay may give the debtor the right to claim actual damages and attorney’s fees (but not punitive damage fees). The automatic stay is further discussed in IRM 8.7.6.1.2.

Bankruptcy courts generally have jurisdiction over all matters concerning payment of a debtor's financial obligations under the Bankruptcy Code and administration of the bankruptcy estate. Bankruptcy court jurisdiction includes the authority to determine the amount of tax due by the debtor or estate and what taxes will be discharged, meaning the debtor no longer will be personally liable. The bankruptcy court also has jurisdiction over any matters concerning collection of tax debts at issue in the bankruptcy case or collection from any property of the estate.

Prior to October 17, 2005, when a debtor filed a petition in bankruptcy court, in all instances the court entered an order for relief which immediately stopped ongoing and future (during the pendency of the bankruptcy) attempts by creditors to collect prepetition debts owed by the debtor or otherwise exercise control over property of the estate or the debtor (11 USC § 362). This essential feature of bankruptcy law created what is known as the automatic stay. For most debtors the automatic stay will remain in effect during the pendency of the bankruptcy case. However, BAPCPA provided that for some individual debtors who file bankruptcy on or after October 17, 2005, and have had one or more bankruptcy cases dismissed within the preceding twelve month period, the automatic stay may either terminate within 30 days or not go into effect at all. See IRM 5.9.5.7,Serial Filers.

11 USC § 362 also prohibits the commencement or continuation of a Tax Court Proceeding while the automatic stay is in effect. BAPCPA amended 11 USC § 362(a)(8) to allow for a commencement or continuation of a Tax Court proceeding when all of the following conditions are met:

the commencement or continuation of a Tax Court case for any taxable period for which the bankruptcy court may determine the liability. Generally, this will include all preconfirmation taxes.

A bankruptcy estate is created upon the filing of the bankruptcy petition. The estate is under the control of the court and generally consists of all of the debtor’s interests in any property at the time the case is filed, plus property acquired by the estate after the petition is filed.

In an individual Chapter 7 or 11 case, the bankruptcy estate is a separate taxable entity. In Chapter 13 cases, certain assets acquired by the debtor postpetition may also be included in the estate (11 USC § 1306). In individual Chapter 11 cases filed on or after October 17, 2005, property of the estate also includes postpetition property of a kind specified in 11 USC § 541 that the debtor acquires after the commencement of the case and earnings from services performed by the debtor (11 USC § 1115).

A proof of claim is a document a creditor files with the bankruptcy court to assert a right of payment from the bankruptcy estate for prepetition debts. A claim can also be filed for postpetition debts in some instances (e.g., § 1305 claims in Chapter 13). Proofs of claims may be for taxes that have been assessed or for which an assessment is being proposed. The bar date is a date fixed by the court or by statute as the date by which a creditor must file a proof of claim. The Service is allowed a minimum of 180 days after the order for relief in which to file a proof of claim. The court may grant extensions for cause.

The Insolvency Organization is the office responsible for timely filing proof of claims with the court. However, to protect the government's interest, IRS employees outside of the Insolvency Organization who are proposing additional tax liabilities, or who have secured tax returns with unpaid balances, are responsible for promptly advising Insolvency of any proposed or unassessed tax liabilities so they may be included as such in the proof of claim.

Examination, Underreporter, Field Functions and Appeals may not have the final tax information by the bar date. In such cases Insolvency will file an unassessed (estimated) proof of claim. An amended proof of claim will subsequently be filed as necessary to claim the correct tax liability owed the Service after the completion of an audit and appeal, if one is filed.

There are two types of trustees in bankruptcy, United States Trustees and private trustees.

U.S. Trustees are appointed by the U.S. Attorney General and employed by the Department of Justice under the Department’s United States Trustee Program. A U.S. Trustee oversees the administration of bankruptcy cases in an assigned region. This includes appointing and supervising private trustees assigned to administer Chapter 7, 12, and 13 bankruptcy estates. Although they do not appoint Chapter 11 trustees, U.S. Trustees may ask the bankruptcy court to appoint one.

Chapter 7, 11, 12, and 13 trustees are private trustees. A private trustee serves in all Chapter 7, 12, and 13 cases, but not in all Chapter 11 cases. Generally, a Chapter 11 debtor manages the business/financial affairs of the bankruptcy estate as the debtor in possession, unless the court orders the appointment of a trustee.

The role of the trustee varies depending on the type of case. Chapter 7 and 11 trustees are more involved in the daily operations of the debtor’s bankruptcy estate. Chapter 12 and 13 trustees have a more limited role, with the focus more on plan confirmation and collecting and disbursing plan payments. Generally, debtors in Chapter 12 and 13 cases continue to manage their own affairs after filing for bankruptcy. In Chapter 12 cases, however, the court is authorized to appoint a trustee to operate the debtor’s business where there is evidence of debtor fraud or incompetence.

The extent to which the Service can disclose return information to a bankruptcy trustee depends on the type of case, the type of trustee, and the reason for the disclosure. For a detailed discussion of the rules governing disclosure to a bankruptcy trustee, IRM 11.3.2.

The automatic stay results in a suspension of the period for making some assessments when a bankruptcy petition was filed before October 22, 1994. The law suspends the running of the statutory period for assessment for the time the Service is prohibited from making an assessment by reason of the bankruptcy plus 60 days. See IRC § 6503 (h). This is a complex area; therefore, refer any questions on the statute of limitations for these cases to Area Counsel on a case by case basis. The Bankruptcy Reform Act of 1994 lifted the stay for assessment of prepetition taxes when the bankruptcy petition was filed on or after October 22, 1994.

Prepetition taxes- Taxes incurred, whether or not assessed, prior to the filing of the bankruptcy petition. An income tax is incurred on the last day of the tax year. Employment taxes and the trust fund recovery penalty are incurred when the wages are paid.

Post petition taxes— Taxes incurred, whether or not assessed, after the filing of the bankruptcy petition, for tax periods ending after the petition date. An income tax is incurred on the last day of the tax year. Employment taxes and the trust fund recovery penalty are incurred when the wages are paid. The automatic stay does not prohibit the assessment of tax for a post-petition tax period.

The running of the statutory period for collection (CSED) is suspended for the period collection is prohibited (e.g., while the automatic stay is in effect, and in the Chapter 11 context, post-confirmation, provided the Service's claim is allowed, the confirmed plan provides for payment of the tax debt, and the plan is not in default) plus six months. See IRC § 6503(h)(2). Computation of a new CSED is similar to an ASED computation. Six months are added to the unexpired time (number of days) remaining on the original statute as of the petition date and that total is added to the discharge or dismissal date (or the date the stay was lifted) to establish the new CSED.

All Appeals employees should familiarize themselves with IRM 8.21,Appeals Statue Responsibility.

As a general rule, 11 USC § 505(a) permits the bankruptcy court to determine the amount or the legality of any tax, addition to tax, or tax penalty. This applies to tax liabilities of the debtor or of the estate whether or not previously assessed, paid, or contested. Once a bankruptcy court finally determines a liability, the Service may immediately assess the tax. See 11 USC § 505 (c)

The bankruptcy court may not re-examine a tax liability ruled on by a court of competent jurisdiction before the filing of the bankruptcy petition.

The bankruptcy court can determine the right of the estate to a tax refund if the taxing authority does not rule on the trustee's refund claim within 120 calendar days. (See 11 USC § 505(a)(2)(B).)

While the automatic stay does not ban the issuance of a notice of deficiency to the debtor, it prohibits the commencement or continuation of any civil court proceeding, against the debtor, as well as any Tax Court proceeding. The bankruptcy court can lift the stay and allow the Tax Court to determine the tax liability. See 11 USC § 362(a)(8), b(9), and (d).

Jurisdiction over bankruptcy litigation involving the government rests with the Department of Justice. Department of Justice attorneys in the Tax Division and local U.S. Attorney offices represent the Service’s interests in bankruptcy cases once the case is referred to the Department of Justice by Area Counsel. Insolvency has been delegated limited authority to directly refer certain cases to the Department of Justice involving matters that require virtually no legal determinations or where the law is clear. See Delegation Order 25-9, IRM 1.2.52.3. In general, however, when the Service becomes the subject of bankruptcy litigation or decides to file an action in the bankruptcy case, Insolvency refers the case to Area Counsel and Area Counsel refers the matter, if appropriate, to the Tax Division or to the local U.S. Attorney’s office.

Assistant U.S. Attorneys and Special Assistant U.S. Attorneys - Local U.S. Attorney's Offices often handle routine bankruptcy matters for the Department of Justice. In addition, Area Counsel attorneys appointed as Special Assistant U.S. Attorneys (SAUSAs) often represent the Service's interest in bankruptcy cases. IRM 5.9.1.2.1 and IRM 5.9.1.2.2 provide additional information on Counsel's role in bankruptcy cases.

To process tax cases of debtors efficiently, the Assistant Attorney General, Tax Division, Department of Justice and the Chief Counsel have agreed to a bankruptcy referral procedure. The agreement parallels the docketed case Appeals—Counsel jurisdictional provisions in Rev. Proc. 87–24 . Area Counsel guidelines are found in Chief Counsel Directives Manual (CCDM) 34.3.1.1.7. See Exhibit 8.7.6-1.

Each Area Counsel office will designate at least one trial attorney to act as a coordinator of bankruptcy cases. That attorney will provide assistance to Appeals and other Service functions in handling bankruptcy cases.

Upon notification that a taxpayer has filed bankruptcy the Appeals Account Resolution Specialist, Settlement Officer, or Appeals Officer (AARS, SO or AO) must promptly verify the following facts of the bankruptcy filing and annotate in the Case Activity Record:

The documentation confirming the bankruptcy filing can be obtained from the taxpayer, the taxpayer’s representative, PACER (Public Access to Court Electronic Records) at http://pacer.psc.uscourts.gov/ or the local Insolvency Unit, a part of the Collection Function for the SB/SE Operating Division. The Insolvency National Field/Centralized Site Directory may be accessed through http://serp.enterprise.irs.gov/databases/who-where.dr/inslvncy-bnkrptcy/national_insolvency_field.htm. This National Directory provides local contact telephone numbers for Insolvency Field Offices and Centralized Insolvency Operation based on inventory assignment.

If the taxpayer provides the information, a copy of the petition showing the Court’s received date stamp and case number should be included. Otherwise, verify the filing through PACER or Insolvency. Transaction Code TC 520 with the bankruptcy closing codes (cc’s 60 through 67, 81, and 83 through 89) will also appear on TXMODA. In some cases this may be the first indication of a bankruptcy filing. If so, the employee should obtain the facts about the filing through the sources listed above.

All of the facts of filing, as well as how the Appeals employee verified the bankruptcy filing, must annotated in the Case Activity Record.

The Appeals employee may also be contacted by the taxpayer’s bankruptcy attorney. The required bankruptcy documentation can be requested from the bankruptcy counsel.

In all CDP and EH cases, advise the taxpayer that Appeals is suspending any further proceedings in the case until the automatic stay is lifted or the amount and collection of the tax liabilities raised in the hearing are resolved by the bankruptcy. The AARS, SO, or AO should request that the taxpayer contact them when the automatic stay has lifted or a plan has been confirmed. However, this does not substitute for the employee’s responsibility to monitor the bankruptcy proceeding. See IRM 8.7.6.2.3.

Refer the taxpayer and/or representative to Insolvency for any substantive discussions regarding the bankruptcy case.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), for petitions filed on, or after October 17, 2005, certain Chapter 7, 11, or 13 cases filed by individuals may have no automatic stay imposed, or the stay may be terminated 30 days after the petition date. This applies solely to individual serial bankruptcy filers. See IRM 5.9, Bankruptcy, or consult with Area Counsel for additional guidance.

If the AARS, SO, or AO determines that the CDP Levy notice was issued or the Notice of Federal Tax Lien was filed after a bankruptcy filing, and in violation of the automatic stay, the employee assigned the case will issue the Rescission Letter and the case will not be suspended but rather closed as a premature referral. See IRM 8.22 for closing cases as premature referrals. Advise the taxpayer that the lien filing is being withdrawn or the levy is being released and copies of the lien withdrawal or levy release will be mailed to them by Insolvency for liens and Compliance for levies.

The AARS, SO or AO should check IDRS for the TC 520 bankruptcy codes on TXMODA prior to issuing a Notice of Determination or a Decision Letter. A bankruptcy filing may have occurred after the CDP/EH hearing, but prior to the case being closed. If a Notice of Determination or Decision Letter is issued while a bankruptcy case is pending, and the automatic stay is in effect, rescind the Notice of Determination or Decision Letter and place the case in E/BNK suspense for monitoring. See IRM 8.22 for the Notice of Determination or Decision Letter rescission procedures.

The automatic stay may not be in effect for a CDP hearing only involving a post-petition liability and as a result the hearing could be conducted and a Notice of Determination or Decision Letter could be issued. However, in bankruptcy cases filed before October 17, 2005 and in cases filed by corporate debtors on or after October 17, 2005, the automatic stay may prevent a taxpayer from seeking Tax Court review of a Notice of Determination or Decision Letter. In these instances do not issue Notices of Determination or Decision Letters; if already issued rescind the letter. For CDP hearings only involving post-petition liabilities of an individual debtor, contact Counsel for assistance in determining whether a Notice of Determination or Decision Letter may be issued or should be rescinded.

Reassign cases that warrant suspension to the AARS for input of the appropriate bankruptcy suspension codes and monitoring of the bankruptcy case. In Appeals offices that do not have an AARS, the SO or AO will retain the case in inventory and will be responsible for input the suspension codes, as well as monitoring the bankruptcy using the procedures set forth in IRM 8.7.6.2.3.

To place a case in E/BNK suspension, input the CARATS Action Code BI and enter the date the bankruptcy petition was filed. The system will only allow an input of a BI date that is three years from the current fiscal year. The Bankruptcy field will automatically populate with a Y. Input of the BI Action Code will launch a system generate response of SU-PI and automatically place the case in E/BNK status. Feature Code "BK" is now obsolete.

If a taxpayer submits a processable offer in compromise in a CDP/EH proceeding and subsequently files bankruptcy, return the offer to the taxpayer and close the OIC Work Unit Number. See IRM 8.23 for procedures on returning an offer in compromise filed under a CDP. The CDP/EH has to remain in open suspense until the bankruptcy is resolved.

Appeals employees that are assigned cases in E/BNK suspense will monitor the case on a monthly basis to determine the status of the bankruptcy. A CARATS entry must be made documenting the action taken and the status of the proceeding.

PACER is the preferable method of monitoring the proceeding. This system maintains records and provides court notifications, as well as the current status of a majority of bankruptcy cases. AARS, SO’s or AO’s assigned suspended cases should obtain authorization for use of this database. PACER may be accessed at http://pacer.psc.uscourts.gov/.

The CDP/EH proceeding may resume once the automatic stay is lifted. Even if the automatic stay is not lifted, the issuance of a Bankruptcy Resolution Notice of Determination or Decision Letter may be appropriate in a Chapter 13 case, or an individual Chapter 11 case filed on or after October 17, 2005. See IRM 8.7.6.2.6. for cases that meet this criteria. For non-individual chapter 11 debtors and individual debtors whose Chapter 11 cases were filed before October 17, 2005, the stay lifts upon confirmation of the plan.

To remove a case in E/BNK suspension input the CARATS Action Code BO and enter the date the stay was lifted. Input of the BO Action Code will launch a system generate response of SU-TO and automatically change the status from E/BNK to the most recent CARATS action code. In cases where a plan in an individual Chapter 11 filed on or after October 17, 2005 or a Chapter 12 or 13 plan has been confirmed (regardless of the date the bankruptcy was filed), the case will remain in E/BNK status and reassigned to an SO or AO to determine if the confirmation of the plan resolves the amount and collection of the tax liabilities raised in the CDP/EH hearing. If the plan resolves all of the CDP/EH issues and the taxpayer withdraws the request for a hearing, then the SO or AO will input the bankruptcy action codes using the date the plan was confirmed.

If the SO or AO has confirmed that all CDP/EH issues have been resolved by the confirmed plan and the taxpayer agrees but declines to withdraw the CDP/EH input CARATS Action Code BO using the date the plan was confirmed and issue the Bankruptcy Resolution Notice of Determination or Bankruptcy Resolution Decision Letters available on APOLF

.

The following is general guidance on determining when the automatic stay has been lifted and the CDP/EH proceeding may resume. Due to the complexities and unique set of laws governing each of the bankruptcy chapters, seek guidance from Counsel when necessary.

Once it has been verified that the automatic stay has been lifted remove the case from E/BNK status; it will systemically revert to its pre-suspension status. Confirmation of a plan does not lift the automatic stay in individual Chapter 11 cases filed on or after October 17, 2005, or in Chapter 12 or Chapter 13 cases regardless of the date the bankruptcy was filed. These cases will remain in E/BNK status. The Appeals employee will contact the taxpayer and continue the CDP/EH process.

After the automatic stay has lifted, all tax issues with respect to the tax liabilities raised in the CDP/EH hearing may not have been resolved by the bankruptcy. The taxpayer may raise issues such as the collection of nondischargeable taxes, the dischargeability of taxes, or the extent to which discharged taxes may be collected from property exempted, abandoned or excluded from the estate. Under these circumstances continue the CDP/EH hearing in order to resolve these issues. The SO, or AO should refer to IRM 5.9, Bankruptcy or consult with Counsel or Insolvency as needed on the dischargeability of taxes or the collection of dischargeable taxes.

In a Chapter 7 case involving a non-individual entity, or a Chapter 11 case involving a non-individual entity in which all assets are liquidated and the entity will cease doing business after completion of the plan, the automatic stay does not lift until the case is closed. Because the entity will cease to exist and there will be no assets from which the IRS can collect after the bankruptcy, there is no purpose in resuming the CDP/EH hearing. The SO or AO will contact the taxpayer after the lifting of the automatic stayand ask for a withdrawal of the CDP/EH hearing request. If the taxpayer will not withdraw the hearing request, issue the Notice of Determination or Decision Letter (Letters 3193 or 3210). The Notice of Determination or Decision letter should state that the automatic stay has lifted and levy action is not sustained or the NFTL will be released after the collection statute has expired because all of the assets of the taxpayer have been liquidated and distributed in accordance with the bankruptcy court’s order of final distribution or confirmed plan and the taxpayer will cease to exist. As a result, there is no property from which to collect by levy or to which the tax lien could attach.

In an individual Chapter 7 case with no assets to be liquidate (no asset), resume the CDP/EH hearing after the discharge order is entered. In an individual Chapter 7 case with assets to be liquidated, the hearing may be resumed after the discharge order is entered but there may be instances where the hearing process cannot be completed until the amount of taxes remaining unpaid after final distribution is known.

In a Chapter 11 case involving a non-individual entity or an individual who filed the case prior to October 17, 2005, resume a CDP/EH hearing after confirmation of the plan.

In an individual Chapter 11 filed on or after October 17, 2005, a Chapter 12 or a Chapter 13 regardless of the date the bankruptcy was filed, resume the CDP/EH hearing after a discharge order is entered (usually after all of the plan payments have been made). See IRM 8.7.6.2.6 below regarding the CDP process for cases where a Chapter 11, 12, or 13 plan has been confirmed and the automatic stay is still in effect

If a discharge order has been entered in an individual Chapter 7, a Chapter 12 or a Chapter 13 case, or an individual Chapter 11 filed on or after October 17, 2005, a Form 12256 or 12257 may be used.

In cases where the plan in an individual Chapter 11 case filed on or after October 17, 2005, a Chapter 12 plan, or Chapter 13 plan regardless of the date the bankruptcy was filed has been confirmed, the SO or AO must obtain confirmation from Insolvency, or from Counsel if legal advice is needed, that the amount and collection of the tax liabilities raised in the CDP/EH hearing are provided for in the plan and there will be no remaining tax debt or assets subject to collection after all of the payments and conditions of the plan have been met and the discharge order is granted. Use the Bankruptcy Resolution Checklist on APGOLF to guide the process of confirming that all tax issues have been resolved. See IRM 8.7.6.2.6(6) to determine if a confirmed plan has resolved all of the CDP/EH issues.

The SO or AO may then contact the taxpayer, and explain that all issues that the taxpayer intended to raise were resolved in the bankruptcy proceeding and inquire whether he or she still needs a CDP/EH hearing. If the taxpayer believes that all issues have been resolved and chooses to withdraw the CDP/EH hearing request, then a written request, not verbal, must be submitted. The executed document should clearly state that all issues have been resolved through the bankruptcy and the taxpayer wishes to withdraw the CDP/EH hearing request. The taxpayer should not be coerced into withdrawing the CDP/EH hearing request.

The SO or AO will document in the CARATS their consultation with Insolvency or Counsel regarding how the confirmed plan resolves all of the CDP/EH issues or why the confirmed plan did not resolve the issues.

If all of the issues have been fully resolved through the debtor’s confirmed plan but the debtor declines to withdraw the hearing request, or does not respond, the Bankruptcy Resolution Notice of Determination or the Bankruptcy Resolution Decision Letter, available on APGOLF, may be issued before completion of the plan.

The confirmation of an individual taxpayer’s Chapter 11 plan in a case filed on or after October 17, 2005 or the confirmation of a Chapter 12 or 13 plan (regardless of the date the bankruptcy was filed), in which the amount and collection of the tax liabilities raised in the CDP/EH hearing have been resolved by the confirmed plan, serves as a collection alternative whose terms and conditions have been ordered by the court and agreed to by the taxpayer and the IRS. Therefore, the Bankruptcy Resolution Notice of Determination or Decision Letter must state that the CDP/EH case has been fully resolved through confirmation of the plan, a collection alternative has been reached and the proposed levy action is not sustained. If the case involves a CDP/EH lien hearing, then the Notice of Determination or Decision Letter should state that NFTL will be released upon completion of the plan and entry of the discharge order. Because the taxpayer declined to withdraw the CDP request, a Notice of Determination or Decision Letter is required. The Bankruptcy Resolution Notice of Determination and Decision Letters both give the taxpayer 30-days to disagree with the determination or decision and present additional or new information for the SO/AO to consider.

Not all confirmed plans address and resolve all tax issues. Issues are fully resolved through a confirmed Chapter 12, Chapter 13 or individual Chapter 11 plan only if:

All CDP/EH issues are not resolved if:

The case file must include a copy of the confirmed plan, the IRS’s proof of claim, which can be obtained from Insolvency and the Bankruptcy Resolution Checklist.

If Insolvency, or Counsel if legal advice is necessary, has confirmed that all of the CDP/EH issues are fully resolved; however, the taxpayer disagrees but provides no basis to reverse Counsel’s or Insolvency’s determination, then the SO or AO will issue the Bankruptcy Resolution Notice of Determination or the Decision Letter. Appeals will retain jurisdiction on the CDP/EH case .

The SO/AO will annotate in the remarks section of Form 5402-c that the taxpayer is in a confirmed plan and the automatic stay is in effect.

For Equivalent Hearing cases the SO/AO will mail the Bankruptcy Resolution Decision Letter, signed by the Appeals Team Manager, and retain the case file in inventory for 30-days. If there is no response from the taxpayer the case can be submitted for closure. The SO/AO will also mail a copy of the Bankruptcy Resolution Decision Letter to the Insolvency Unit assigned the bankruptcy case and annotate on Form 5402-c that the Decision Letter was mailed to the taxpayer.

For CDP cases requiring the issuance of the Bankruptcy Resolution Notice of Determination (BKNOD), the SO/AO will transfer the case to APS using the Bankruptcy Resolution Transmittal Memorandum – CDP Cases on APGOLF. The SO/AO will enter the address for the Insolvency Unit assigned the bankruptcy case on the transmittal memorandum. APS will mail the Bankruptcy Resolution Notice of Determination by certified mail.

For Equivalent Hearing cases follow the procedures in IRM 8.22.

For timely CDP cases requiring the issuance of the Bankruptcy Resolution Notice of Determination (BKNOD) take the following actions:

When a taxpayer has filed for bankruptcy protection, the IRS's policy is not to consider administrative offers in compromise from a taxpayer in bankruptcy. Refer to IRM 5.8.10. The Bankruptcy Code provides for procedures to resolve the Service's claim depending on the type of bankruptcy case filed. These are addressed in IRM 5.9.

Taxpayers will occasionally file bankruptcy after they appeal Collection's rejection of an offer. Doubt as to Collectibility and Effective Tax Administration offers from taxpayers in bankruptcy will be sustained rejections. Doubt as to Liability Offers will be returned.

An offer will not be considered under the administrative, or CDP offer in compromise procedures until the bankruptcy is concluded or terminated.