A case filed under Chapter 11 of the bankruptcy code is frequently referred to as a “reorganization.” It is used primarily by incorporated businesses. Individuals whose debt exceeds the maximum limit for Chapter 13 also file Chapter 11. The debtor uses the time from their bankruptcy filing to the confirmation of their debt repayment plan to reorganize their finances. Failure to successfully reorganize and get a debt repayment plan approved may result in a Chapter 11 case being converted to a liquidating Chapter 7.
To take full advantage of the bankruptcy laws and get a fresh start, it is important that you do not continue to incur additional debt. As part of their reorganization, businesses must ensure that they are capable of meeting all financial obligations going forward, including federal income and payroll taxes. Individuals may need to increase their withholding and/or estimated tax payments.
Find detailed information on Chapter 11 on the U.S. Courts Bankruptcy Basics Web page.
Federal Tax Refunds During Bankruptcy
You can receive tax refunds while in bankruptcy. However, refunds may be subject to delay or used to pay down your tax debts. If you believe your refund has been delayed or offset against your tax debts you can check on its status by going to our Where’s My Refund tool or by contacting the IRS’ Centralized Insolvency Operations Unit at 1-800-973-0424. The unit is available Monday through Friday from 7:00 a.m. to 10:00 p.m. eastern time.
If you successfully complete your bankruptcy plan you will receive a discharge of debt. A discharge releases you (the debtor) from personal liability for certain dischargeable debts. Some taxes may be dischargeable. Whether a federal tax debt may be discharged depends on the unique facts and circumstances of each case. Consult your bankruptcy attorney to determine which tax debts may be discharged.
General Tax Questions
Please note: We cannot provide legal or other advice about your bankruptcy case. If you have questions about filing and paying your federal taxes you can find answers here on our website and in the list of resources on the right side of this page. If you want to speak to someone at the IRS please call:
- Individuals – 1-800-829-1040
- Businesses – 1-800-829-4933