5.9.19 Insolvency Disclosure and Telephone Procedures

Manual Transmittal

March 20, 2019

Purpose

(1) This transmits a revised IRM 5.9.19, Insolvency Disclosure and Telephone Procedures, with table of contents, text, and exhibits.

Material Changes

(1) The content in this IRM section has been updated to provide clarification and expansion of existing material. The table below shows substantive changes within this IRM revision.

IRM Changes
5.9.19.1 Revised title and added content to comply with new IRM internal controls requirements.
5.9.19.3(2) Clarified the required checks when Field Insolvency has telephone contacts.
5.9.19.3(3) Updated Field Insolvency caller identification guidance.
5.9.19.3(6) Updated guidance on installment agreements when debtors are in a bankruptcy and added guidance to enter AIS history with receipt of the call, caller’s phone number, and best time to call.
5.9.19.4(2)(d) Added guidance on researching the Automated Insolvency System (AIS).
5.9.19.4(2)(i) Added guidance on written responses as letters may need approval from Media & Publications if they do not contain a one- to four-digit letter number.
5.9.19.4(2)(h) Added guidance on documentation to the phone processing steps.
5.9.19.4(3) Clarified taxpayer verification.
5.9.19.4(4) Added guidance on contacts with IRS employees.
5.9.19.4.2(3) Updated guidance on installment agreements when debtors are in a bankruptcy and added guidance to enter AIS history with receipt of the call, caller’s phone number, and best time to call.
5.9.19.4.3(1) Updated BLARE web link and added BLARE topics.
Exhibit 5.9.19-1 Added IRM references for disclosures made to Non-debtor spouse. Clarified disclosures to an Attorney when there are "administrative expense taxes owed by the bankruptcy estate" . Added disclosure to a bankruptcy paralegal.
Exhibit 5-9-19-2 Updated IRM guidance for Transcript Request as caseworkers no longer use MFTRA-X to secure transcripts. Caseworkers use the e-Services product Transcript Delivery System via the Employee User Portal (EUP).
Exhibit 5.9.19-3 Updated Insolvency Letters table to correct letter name, who to address letter to, what Chapter can receive the letter, and/or which caseworker can send the letter. Added Letter 3931, Letter 4914, and Letter 6089. Added note when correspondence requests information, action, or returns. Added reminder when debtor has a Power of Attorney.
Throughout References of phone assister, employee, specialists, and advisors have been replaced with caseworker.
Throughout IRM sections have been renumbered due to the movement of content to internal controls.

(2) Editorial changes were made throughout this section to add clarity and to update, correct, or add citations.

Effect on Other Documents

This material supersedes IRM 5.9.19, dated November 15, 2011.

Audience

Small Business/Self-Employed, Specialty Collection - Insolvency

Effective Date

(03-20-2019)

Nikki C. Johnson, Director
Collection Policy

Program Scope and Objectives

  1. Purpose. This Internal Revenue Manual (IRM) section contains guidance for Insolvency employees related to disclosure and telephone procedures.

  2. Audience. This IRM section is designed for use by Specialty Collection - Insolvency (SCI) caseworkers and management in the Centralized Insolvency Operation (CIO) and Field Insolvency (FI). This IRM section may be referred to by other Small Business / Self-Employed (SB/SE) employees; such as, Revenue Officers and Advisors. Employees in functions other than SB/SE may refer to this section when dealing with a taxpayer that has filed bankruptcy.

  3. Policy Owner. The Director of Collection Policy is responsible for issuing policy for the Insolvency program.

  4. Program Owner. The program owner is Collection Policy, Insolvency, an organization within the SB/SE division.

  5. Primary Stakeholders. The primary stakeholder is SB/SE Collection, Specialty Collection - Insolvency.

  6. Program Goals. Insolvency cases can present some unique disclosure issues. Both CIO and FI caseworkers primarily interact with debtors and debtor’s attorneys by telephone. By following the procedures in this IRM, caseworkers will be able to avoid unauthorized disclosures of tax information, and will also be able to appropriately handle telephone contacts involving insolvency issues.

Background

  1. IRM 5.9.19 contains the services position, procedures, information, instructions, guidance, and references concerning bankruptcy cases.

Authority

  1. IRC § 6103, Confidentiality and disclosure of return and return information, contains specific provisions forming the statutory framework for disclosures authorized in the bankruptcy context.

  2. IRM 5.9.3.1.2, Authority, contains Insolvency caseworkers’ authority in the Insolvency program.

Responsibilities

  1. IRM 5.9.3.1.3, Responsibilities, contains Insolvency caseworkers’ responsibilities in the Insolvency program.

  2. IRM 5.9.1.4, The Role of Insolvency, provides a list of titles and responsibilities with an explanation of their roles and authority.

Program Management and Review

  1. Program Reports. IRM 1.4.51.7.3, Case Management Tools, contains a list of required reports for caseworkers and managers to utilize for inventory management and review of case inventories. This section also includes the frequency and purpose of each report.

  2. Program Effectiveness.

    1. National quality reviews and consistency reviews are conducted on a consistent basis. See IRM 1.4.51.15.1, NQRS, and IRM 1.4.51.15.2, EQ Consistency Reviews, for more information.

    2. Operational and Program reviews are conducted on a yearly basis. See IRM 1.4.51.16.2, Operational Reviews, and IRM 1.4.51.16.5, Program Reviews, for more information.

Program Controls

  1. Managers are required to follow program management procedures and controls addressed in IRM 1.4.51.4.2, Reviews (Overview), IRM 1.4.51.14, Controls, and IRM 1.4.51.15, Quality.

  2. Caseworkers and managers use the Automated Insolvency System (AIS) for case management, assignment, and documentation of all insolvency and non-bankruptcy insolvency cases. See IRM 5.9.3.2, Automated Insolvency System (AIS).

Terms/Definitions/Acronyms

  1. A glossary of terms used by Insolvency can be found in Exhibit 5.9.1-1, Glossary of Common Insolvency Terms.

  2. Common acronyms acceptable for use in the AIS history are listed in Exhibit 5.9.1-2, Acronyms and Abbreviations.

  3. Additional acceptable acronyms and abbreviations are found in the ReferenceNet Acronym Database, which may be viewed at: http://rnet.web.irs.gov/Resources/Acronymdb.asp.

  4. Acronyms used specifically in this IRM section are listed below:

    Acronyms Definitions
    AIS Automated Insolvency System
    BLARE Bankruptcy Law Advisory Rules Engine
    CI Criminal Investigation
    CIO Centralized Insolvency Operation
    DIP Debtor in possession
    FI Field Insolvency
    PACER Public Access to Court Electronic Records
    POA Power of Attorney
    SCI Specialty Collection - Insolvency

Related Resources

  1. IRM 11.3, Disclosure of Official Information.

  2. The United States Bankruptcy Code and Rules, including Local Bankruptcy Court Rules.

  3. AIS User Guide, Document 13219.

  4. MySB/SE Insolvency/Bankruptcy page: http://mysbse.web.irs.gov/collection/insolvency/default.aspx.

Disclosure

  1. Introduction. During the pendency of a bankruptcy proceeding, which can range from a few days to several years, IRS employees can have numerous contacts on the case. These may include oral, written, and electronic communications. Insolvency employees may also appear at § 341 meetings of creditors and give testimony in bankruptcy court.

  2. Damages/Penalties for Unauthorized Inspection or Disclosure. Service employees must not inspect or disclose confidential tax information without authorization. They must be aware of disclosure laws and the nature of information permitted to be disclosed and to whom it may be disclosed. Unauthorized inspection or disclosure of returns or return information may result in civil damages against the United States (IRC § 7431, Civil damages for unauthorized inspection or disclosure of returns and return information) and/or criminal penalties against the individual who inspected or disclosed the information (IRC § 7213, Unauthorized disclosure of information, and IRC § 7213A, Unauthorized inspection of returns or return information).

  3. Tax Administration. Significant differences exist in the disclosure rules depending upon whether or not a proceeding pertains to tax administration as defined in IRC § 6103(b)(4), Tax administration.

  4. General Rule. A bankruptcy case should be considered a proceeding pertaining to tax administration if the bankruptcy court’s jurisdiction is properly invoked in any manner to determine a tax matter, and the federal government and the debtor are properly before the court.

    Example:

    The debtor’s listing the IRS as a creditor in the petition or in an attached schedule of liabilities, or the IRS’s taking formal action, such as filing a motion to compel filing of a tax return, are examples of proceedings pertaining to tax administration. Another example is the IRS’s filing a proof of claim for taxes owed even though the debtor failed to list the IRS as a creditor in the debtor’s schedules filed with the bankruptcy court.

  5. Certain Disclosures Allowed. Under the rules of IRC § 6103(h)(2), Department of Justice, and IRC § 6103(h)(4) , Disclosure in judicial and administrative tax proceedings, if a bankruptcy case pertains to tax administration, certain disclosures of the debtor’s tax information are permitted to the court, to the Department of Justice, to case trustees (including the standing Chapter 13 trustee), or to any other party to the proceeding. Such disclosures generally do not require the debtor’s consent.

    Caution:

    Disclosures of the debtor’s return information under IRC § 6103(h)(2) and IRC § 6103(h)(4) should be limited to information directly related to the tax matter at issue. Third party return information should be disclosed only if it satisfies the "item" or "transaction" test. See IRM 11.3.22.10.1.2, IRC § 6103(h)(2)(B) and (h)(2)(C), and IRM 11.3.22.15, Disclosure of Returns and Return Information in Judicial and Administrative Tax Proceedings.

  6. Non-Tax Administration. If a bankruptcy case does not involve tax administration, the debtor’s tax information usually can be disclosed only:

    1. with the debtor’s consent;

    2. to a Chapter 7 or 11 case trustee if requested in writing pursuant to IRC § 6103(e)(4), Title 11 case and receivership proceedings, IRC § 6103(e)(5), Individual’s title 11 case, or IRC § 6103(e)(7), Return information; or

    3. in a criminal proceeding pursuant to IRC § 6103(i), Disclosure to Federal officers or employees for administration of Federal laws not relating to tax administration.

      Note:

      Caseworkers must determine if a particular bankruptcy case or proceeding pertains to tax administration. Not every bankruptcy case meets the definition of a tax administration case.

  7. Disclosure and Debtor’s Attorney. In a bankruptcy proceeding involving the tax liabilities of a debtor, the IRS may disclose to the debtor’s attorney of record the debtor’s return information relevant to the resolution of those tax matters affected by the proceeding (IRC § 6103(e)(6), Attorney in fact). An attorney becomes the debtor’s attorney of record by filing the bankruptcy petition or otherwise entering an appearance before the court in the bankruptcy case.

  8. Verification of Representation. During the term of a bankruptcy case, a debtor may change legal representation. IRS caseworkers must verify the attorney contacting the Service on the debtor’s behalf is indeed the debtor’s current attorney of record. If doubt exists that the bankruptcy petition has been filed or that the representative is currently the attorney of record, Service employees must probe the contact to establish those facts or obtain a valid consent from the debtor prior to making a disclosure, when the bankruptcy is a proceeding relating to tax administration.

  9. Disclosure and the Trustee. Under IRC § 6103(h)(4), Disclosure in judicial and administrative tax proceedings, Insolvency may disclose tax information to the trustee assigned to the bankruptcy as long as the information is directly related to the Service’s claim - either pre-petition or under 11 USC § 1305, Filing and allowance of postpetition claims. For example, Insolvency may consult the trustee to determine if the trustee will allow modification of the plan to accommodate payment of a § 1305 claim. Insolvency may not discuss full paid pre-petition tax periods for which no claim has been filed unless the debtor consents. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) gives the trustee the right to review certain pre-petition returns filed by the debtor, but it is the debtor, not the Service, who is required to provide those returns and return information.

    Note:

    Disclosure to a trustee’s employees is not allowed unless the debtor has provided consent for such disclosure.

  10. Disclosure and Debtor’s or Attorney’s Accountant. The debtor or the debtor’s attorney of record may request that the IRS discuss the debtor’s tax information with an accountant. Disclosure is not proper under those circumstances unless the debtor has signed a valid power of attorney appointing the accountant as his or her representative or unless the debtor has provided a valid written or oral consent (Treas. Reg. § 301.6103(c)-1, Disclosure of returns and return information to designee of taxpayer.). Form 2848, Power of Attorney and Declaration of Representative, may delegate authority to the attorney to add or substitute the accountant as an additional representative or permit the attorney to execute consents to disclose to the accountant.

  11. Disclosure and the § 341 Meeting. The first meeting of creditors (the 341 meeting) is held shortly after the debtor files a bankruptcy petition (11 USC § 341, Meetings of creditors and equity security holders). The debtor is examined under oath by creditors and the trustee.

    1. An IRS employee may attend the 341 meeting to gain information concerning tax compliance (e.g., unfiled tax returns or potential responsibility for unpaid trust fund taxes).

    2. If the IRS is listed as a creditor in the debtor’s schedules, the IRS may disclose in the 341 meeting the debtor’s return information to the extent necessary to examine the debtor (IRC § 6103(h)(4), Disclosure in judicial and administrative tax proceedings).

    3. If the IRS is not listed in the schedules and the Service has not yet filed a proof of claim, the IRS may exhibit general familiarity with the debtor’s tax history in examining the debtor, providing the disclosure is necessary to obtain information not otherwise reasonably available (IRC § 6103(k)(6), Disclosure by certain officers and employees for investigative purposes).

      Caution:

      In all of these situations, questions must be posed so only necessary information is disclosed by the IRS.

  12. Disclosure Resources. Insolvency employees should be familiar with Chapter 6 of the Disclosure & Privacy Law Reference Guide,Pub 4639 available on the IRS website at http://www.irs.gov/pub/irs-pdf/p4639.pdf. It provides information on disclosure and bankruptcy. Also, they should refer to relevant statutes in the Internal Revenue Code (IRC), including:

    • IRC § 1398, Rules relating to individuals’ title 11 cases

    • IRC § 1399, No separate taxable entities for partnerships, corporations, etc.

    • IRC § 6103, Confidentiality and disclosure of returns and return information

    • IRC § 7213, Unauthorized disclosure of information

    • IRC § 7213A, Unauthorized inspection of returns or return information

    • IRC § 7401, Authorization

    • IRC § 7431, Civil damages for unauthorized inspection or disclosure of returns and return information

    • IRC § 7602, Examination of books and witnesses

    • IRM 11.3, Disclosure of Official Information

    • Relevant statutes contained in the Bankruptcy Code

    Note:

    If IRS employees face specific disclosure issues not covered in any of the above references or need interpretative help, they should contact their local Disclosure Office.

Field Insolvency (FI) Telephone Contacts

  1. Telephone Contacts. Because of the large geographic areas handled by FI caseworkers, most of their contacts with debtors and debtor's attorneys are by telephone.

  2. Required Checks:

    • As needed, the caseworker should secure return or return information, check compliance, determine the feasibility of a plan, and/or discuss post-petition taxes.

    • The caseworker must attempt to identify the primary cause of a debtor’s noncompliance and educate the debtor or the debtor’s representative on how to remain compliant with future filing and payment obligations.

    • If the caseworker requests that the debtor or debtor’s representative provide information, complete an action, or file returns, the caseworker should communicate a reasonable and specific action date, and advise of any potential consequences if the action date is missed.

    Note:

    These checks apply to telephone contacts and in-person meetings with the debtor or debtor's representative, and include 341 meetings or office appointments.

  3. Caller Identification. Before disclosing taxpayer information, FI caseworkers must verify the caller. (Exhibit 5.9.19-1, Disclosure Chart.)

  4. Call Referral. For call inquiries received in the FI offices on cases assigned to the CIO inventory, the callers should be referred to the toll-free phone unit in Philadelphia at 800-973-0424 unless the inquiries fall under the umbrella of complex case issues as outlined in IRM 5.9.1.4(5), Complex Issues. FI caseworkers must work calls on complex issues.

  5. Chapter 7 Asset Calls. FI caseworkers will work calls received on Chapter 7 Asset cases assigned to them, and will handle calls on cases assigned to the CIO if a complex issue is involved. CIO will take calls on Chapter 7 Asset cases assigned to CIO caseworkers, but will refer complex questions to a FI caseworker.

  6. Chapter 7 No Asset and Chapter 13 Calls. FI caseworkers will answer questions received on Chapter 7 No Asset cases and Chapter 13 cases assigned to the FI inventory. CIO will handle questions received on Chapter 7 No Asset and Chapter 13 cases assigned to the CIO inventory, unless the inquiry concerns a post-petition liability or is deemed a complex issue. CIO will handle calls involving general payment questions. While in bankruptcy, installment agreements are not granted but the debtors can make voluntary payments. For other post-petition or complex issues, the caseworker must provide the caller with the phone number for the appropriate FI caseworker and the caseworker must enter in the AIS history the receipt of the call, the caller’s phone number, and best time to call. FI caseworkers will handle inquiries involving complex issues.

  7. Chapter 9, 11, 12, and 15 Calls. FI must take all calls concerning Chapter 9, 11, 12, and 15 insolvency issues even if no bankruptcy has been filed.

  8. Non-Insolvency Calls. When FI receives a call on a case in its inventory, but the issue is not bankruptcy-related (e.g., math error), the caseworker should refer the caller to the toll-free number 800-829-1040 for individual accounts or to toll-free number 800-829-4933 for business accounts. If a call has been received completely in error but falls under the purview of another IRS function, the caseworker must research SERP to provide the taxpayer with a correct contact number.

    Caution:

    "Internal use only" phone numbers are not to be given to the public.

CIO Telephone Procedures

  1. Overview of Response to Incoming Calls. The technical units handle bankruptcy calls concerning Chapter 7 No Asset and Chapter 13 issues in the CIO inventory unless the inquiry concerns a complex issue.

  2. Phone Processing Steps. The phone processing steps are an overview of the methods CIO caseworkers will use to respond to incoming calls. Processing steps include:

    1. Call Identification. Identifying the type of call: general Insolvency questions, non-Insolvency questions, case-related Insolvency questions, or complex issues.

    2. Servicewide Electronic Research Program (SERP). Researching SERP to provide caller with correct contact number regarding non-Insolvency questions.

    3. Bankruptcy Law Advisory Rules Engine (BLARE). Using electronic research tools to provide caller with correct information regarding general Insolvency questions. BLARE can be accessed at this web site: http://serp.enterprise.irs.gov/databases/local-sites-other.dr/blare/blare.html.

    4. Automated Insolvency System (AIS). If AIS research shows the case is assigned to FI, the CIO caseworker will refer the caller to the field. The CIO caseworker must provide the caller with the correct contact number of the assigned FI caseworker and notate in the AIS history that caller’s phone number and the best time to call the debtor.

    5. Insolvency Case Assignment Tool. Accessing web site http://serp.enterprise.irs.gov/cgi-bin/AISCT_Search.cgi to provide the caller with correct contact numbers when AIS is not available or CIO is referring a caller on a Chapter 7 No Asset complex issue.

    6. Disclosure. Performing disclosure inquiries for callers requesting specific case information relating to bankruptcy and/or taxes.

    7. Integrated Data Retrieval System (IDRS) Research. Researching IDRS to find specific taxpayer account information for case-related questions pertaining to cases in the CIO inventory.

    8. Response to Caller. Responding to the caller with information needed to resolve case-related questions in the CIO inventory.

    9. Written Responses. Requests from callers for responses in writing can be provided using the programmed letters on AIS or SERP. (See Exhibit 5.9.19-3, Approved Insolvency Letters.) Ad hoc letters may be prepared under management supervision. Counsel approval may be required for ad hoc letters. Letters, when they are intended for distribution to 10 or more, must go through the Media & Publications organization for approval before they can be used for official IRS business. The identification of this correspondence consists of the word "Letter" followed by a one- to four-digit number as discussed in IRM 1.17.8.5.2.2, Letters Numbering Series.

    10. Online Adjustments. Inputting bankruptcy-related online adjustments to debtors' accounts if necessary, using appropriate IDRS command codes while the caller is on the phone. (See Exhibit 5.9.19-2, Common IDRS Adjustments.)

    11. Additional Actions. Taking additional actions as needed (e.g., referrals, manual refund requests, corrections of stay violations, callbacks, and case documentation).

    12. Complex Issues. Refer to IRM 5.9.1.4(5), Complex Issues, to identify which calls should be handled by a FI caseworker. The CIO caseworker must provide the caller with the correct contact number of the assigned employee with regard to complex issues. In addition, the CIO caseworker must annotate the AIS history with the caller's phone number and the best time to call the debtor.

    13. Calls Unrelated to Bankruptcy. Researching SERP to provide taxpayers with a correct contact number when non-Insolvency calls are received at the CIO call site.

      Caution:

      "Internal use only" phone numbers are not to be given to the public.

    14. Documentation. All documentation should be, to the extent possible, completed while the caller is on the phone. Complete and accurate case documentation promotes quality and consistency in working Insolvency cases. See IRM 5.9.19.6, Documentation of Phone Calls.

  3. Taxpayer Verification. Before disclosing taxpayer information, the caseworker must verify the caller is in fact the debtor by verifying the:

    • Taxpayer Identification Number (TIN): If the taxpayer is inquiring about a jointly filed return, only one TIN is necessary, preferably the primary number. The secondary TIN may be required if the primary is unavailable, or for use as an additional authentication check.

    • Name as it appears on the tax return(s) in question, including spouses name for joint return(s).

    • Current address: If taxpayer fails to provide the correct address of record, but correctly responds to all the items, caseworker may request additional taxpayer authentication.

    • Date of birth (DOB): Of primary or secondary taxpayer. If the taxpayer fails the DOB probe, but correctly responds to all other items, caseworker may request additional taxpayer authentication.

    This information can be found using command code (CC) INOLES (designed to display Master File entity data) on IDRS. CIO caseworkers are required to use the Integrated Automation Technologies (IAT) Disclosure Tool to perform the required taxpayer authentication. If the caller is asking for non-case specific bankruptcy information, taxpayer verification is not needed.

    Note:

    If the caseworker is unable to verify any of this information, the caseworker should follow the specific instructions outlined in IRM 21.1.3.2.3, Required Taxpayer Authentication, and IRM 21.1.3.2.4, Additional Taxpayer Authentication.

  4. Contacts with IRS Employees. If the caller is an IRS employee, the caseworker should secure the caller’s name and all 10 digits of the SmartID Card number. Request the following information about the taxpayer:

    1. Taxpayer Identification Number (TIN)

    2. Name as it appears on the tax return(s) in question

    IRM 5.9.5.4(2), History Documentation, requires caseworkers to include in the AIS history a summary of the contact with other IRS functions.

  5. Contacts with Trustees. Most contacts with a trustee are not considered third party contacts under IRC § 7602(c), Notice of contact of third parties, while the bankruptcy case is pending as long as the contact relates to matters and issues involved in the bankruptcy case. Before speaking with a trustee, the caseworker should verify the trustee information on AIS or PACER. If a trustee's phone call covers several cases, full verification of trustee information need only be completed for the first case. Once the trustee's identity is confirmed, for subsequent cases the caseworker may simply verify the trustee on the phone is handling each case. No disclosures of the debtor's return information may be made to the Chapter 13 trustee or to the U.S. Trustee unless the bankruptcy is a proceeding pertaining to tax administration, pre-petition returns and return information pertaining to the debtor or bankruptcy estate, or the debtor taxpayer has authorized the disclosure.

    Note:

    Contacting a trustee about payment issues after the court closes the bankruptcy case is allowed.

  6. Attorney of Record. Contacting the attorney of record for the debtor is not considered a third party contact while the case is open and under the jurisdiction of the bankruptcy court. The contact must be confined to issues affecting the bankruptcy filing.

  7. Other Contacts.IRM 21.1.3.4, Other Third Party Inquiries, provides information on third party contacts.

General Insolvency Call Issues

  1. Procedural Questions. CIO caseworkers should respond to general Chapter 7 No Asset and Chapter 13 insolvency questions using available resources without accessing AIS or IDRS. If a query is about basic bankruptcy concepts and is not case-specific, the caseworker should refer to the Bankruptcy Code, IRM, or BLARE. For non-bankruptcy issues, such as correcting a math error or effecting a credit transfer, the caseworker should refer the caller to the toll-free number 800-829-1040 for individual taxes or toll free number 800-829-4933 for business taxes.

Case-Specific Insolvency Issues

  1. Chapters 9, 11, 12, or 15 Calls. If a caller to the toll-free line asks either general or case-specific questions concerning a Chapter 9, 11, 12, or 15 bankruptcy, the caseworker will provide the caller with the phone number of the appropriate FI caseworker by using AIS or the Insolvency Case Assignment Tool on SERP. The caseworker must complete an AIS history documenting receipt of the call and the caller's phone number with a best time to call. (Exhibit 5.9.11-1, Accessing a Case on AIS.) If a caller declines to give a phone number or best time to call, the AIS history should reflect that fact.

  2. Chapter 7 Asset Calls. After the caller's identity has been confirmed, CIO employees will answer all questions for Chapter 7 Asset cases assigned to the CIO, unless a complex issue is involved as outlined in IRM 5.9.1.4(5), Complex Issues. If the case is assigned to a FI caseworker or involves a complex issue, the CIO caseworker will provide the caller with the phone number of the appropriate FI caseworker and the CIO caseworker must enter in the AIS history the receipt of the call, the caller's phone number and the best time to call.

  3. Chapter 7 No Asset or 13 Calls. After confirming the caller's identity, CIO caseworkers will answer all questions on Chapter 7 No Asset or 13 questions for cases assigned to the CIO inventory unless the inquiry concerns a post-petition liability or is deemed a complex issue. CIO will handle calls involving general payment questions. While in bankruptcy, installment agreements are not granted but the taxpayers can make voluntary payments. For other post-petition or complex issues, the caseworker must provide the caller with the phone number for the appropriate FI caseworker and the caseworker must enter in the AIS history the receipt of the call, the caller’s phone number, and best time to call. Once the call has been determined to be a case-specific question on an account assigned to the CIO and not a complex issue, the caseworker must ensure the caller is the debtor or has proper disclosure authorization. (See Exhibit 5.9.19-1, Disclosure Chart.)

    Reminder:

    Matters not involving tax administration cases cannot be disclosed to a third party without a taxpayer’s oral or written consent.

    IF... THEN...
    the caller is not authorized to receive information, advise the caller the debtor must submit a completed Form 2848, Power of Attorney and Declaration of Representative, or Form 8821Tax Information Authorization, allowing disclosure of tax information to a third party, or have the caller call back with the debtor on the line, at which time the debtor can give oral permission to disclose tax information to the third party.
    Caution: Form 8821 does not authorize the third party named to represent the taxpayer.
    the issue is complex, provide the caller with the telephone number of the FI caseworker assigned the case. Document the AIS history. IRM 5.9.1.4(5) lists complex issues.

Bankruptcy Law Advisory Rules Engine (BLARE)

  1. Automated Phone Guide. Caseworkers at CIO use BLARE, an automated research engine, to arrive at logical answers to commonly asked questions. BLARE can be accessed at http://serp.enterprise.irs.gov/databases/local-sites-other.dr/blare/blare.html. Used in conjunction with the IRM and the Bankruptcy Code, BLARE provides caseworkers with sufficient information to respond to most Chapter 7 No Asset and Chapter 13 queries. Topics accessible through BLARE are:

    • Disclosure

    • Local Rules

    • Community Property Rules

    • Associate Area Counsel

    • Dischargeability

    • Installment Agreement

    • Levy

    • Lien

    • Non-Debtor Spouse

    • Offer in Compromise

    • Payoff

    • Plan

    • Proofs of Claim

    • Refund

    • Seizure

    • Stay Violation

  2. Updates. The data on BLARE can be updated by submitting a feedback notification. Approval of changes are coordinated with the Rules Committee that is made up of representatives from Counsel, Collection Policy, and Specialty Collection - Insolvency, including CIO. All of the responses on BLARE are consistent with policy and procedures found in IRM 5.9.

Secondary Issues

  1. Bankruptcy Case-Related Issues. Secondary issues may arise in the process of answering or resolving bankruptcy case-related issues. If the information in the AIS case history is insufficient to satisfy the caller’s request or resolve the issue, the caseworker should obtain the contact number for the assigned employee, either from AIS or from the Insolvency Case Assignment Tool on SERP, and give the information to the caller. CIO caseworkers must annotate the AIS history with receipt of the call, the caller's phone number, and the best time to call.

  2. Resolve Issue. While helping debtors with their bankruptcy issues, secondary issues may arise requiring adjustments/corrections on their accounts. Exhibit 5.9.19-2 lists common adjustment requests. Any adjustment requests not made in writing must meet Oral Statement Authority, and tolerances must also be considered by both FI and CIO caseworkers. Management must ensure required security measures are in place regarding online IDRS adjustments.

Documentation of Phone Calls

  1. Required Annotations. Mandatory AIS documentation of phone calls generally applies to both FI and CIO.

  2. Live Phone Calls on Specific Cases. When a debtor, a debtor’s representative, or third party (which can include another IRS employee) phones Insolvency, the AIS history for the case in question must include the identity of the caller, a statement that a disclosure probe was completed (e.g., DV for Disclosure Verified), the nature of the call, and any resolutions, agreements, or unresolved issues brought to light because of the phone conversation. If the CIO refers a caller to a FI caseworker, the CIO caseworker must annotate the AIS history with the receipt of the call, the caller's phone number, and the best time to call.

  3. General Phone Calls. If a call is received asking general bankruptcy information, absent any direction from management to the contrary, no history record need be kept of that phone call.

  4. Phone Messages. Caseworkers are expected to return phone messages within one workday of receipt. Unsuccessful attempts to return a call must be documented in AIS. The documentation should be brief. If a message is left for a debtor, debtor’s representative, or third party on voice mail or an answering machine, the message cannot disclose any taxpayer information.

  5. Out Calls. If an Insolvency caseworker calls a debtor, debtor’s representative, or third party, the caseworker must confirm the identity of the party taking the call to protect against inadvertent disclosure of tax information. The disclosure review must be documented in the AIS history. This direction applies both to returned phone messages and calls initiated by the caseworker.

Disclosure Chart

Note: Information can be received from a third-party. (See IRM 11.3.2.2, General Rules.)

Stakeholder Disclosures Permitted Disclosures NOT Permitted
Debtor All matters regarding tax returns signed by the debtor. (See IRC § 6103(e)(1), In general, and IRC § 6103(e)(7), Return information.) Requests for return copies must be in writing.(See IRC § 6103(e), Disclosure to persons having material interest, and IRM 11.3.2.3,Processing Requests for Returns and Return Information.) Information regarding criminal investigations by Criminal Investigation (CI) if acknowledging the existence of an investigation will impair tax administration. (See IRM 11.3.2.2, General Rules, and IRC § 6103(e)(7), Return information.)
Caution: Existence of a CI investigation can be neither confirmed nor denied unless CI authorizes otherwise. No representations should be made that an investigation is not currently being conducted if the opposite is known to be true.
Non-debtor spouse Only matters on returns signed by the non-debtor spouse. (See IRM 11.3.2.4.1.1, Disclosure of Collection Activities with Respect to Joint Returns, IRM 21.6.8.3, Disclosing Taxpayer Data, and IRC § 6103(e)(1)(B),). For examples of what can be disclosed on MFT 31 and MFT 65 modules, see IRM 5.19.5.4.11.1(5), ACS and Disclosure, Disclosure Examples. All tax return information separately filed by the debtor where the debtor has not given oral or written consent. This includes data available on IDRS through CC IRPTR such as Forms 1099, W-2’s, etc. (See the example in IRM 11.3.2.4.1(2), Individuals.)
Attorney All matters of tax administration cases for the debtor for which the attorney is named representative, generally pre-petition returns and return information. (See IRM 11.3.3.1.6(4), Disclosure to an Attorney-in-Fact). The "representative" requirement is considered to be met by the attorney’s entry of an appearance in the bankruptcy proceeding, by the signing of the petition, or for which the attorney has a valid Form 2848, Power of Attorney and Declaration of Representative. Attorney for the debtor is not allowed to receive information on any return due and owing after the petition date unless the debtor has given oral or written consent, unless an issue arises regarding the debtor’s post-petition taxes before the bankruptcy court (e.g., a 1305 claim has been filed), or administrative expense taxes owed by the bankruptcy estate under Bankruptcy Code § 503(b)(1)(B) or (C) in a case where the debtor serves as the debtor in possession (DIP) and the attorney confirms to the IRS’s satisfaction that the attorney continues to serve as the debtor’s attorney of record in the ongoing bankruptcy case.

Note:

If a debtor is serving as the DIP in a case, the attorney for the debtor is also the attorney for the DIP.


Additionally, once the bankruptcy discharge is granted or the bankruptcy case is dismissed or closed by the court and the case ceases to involve a matter of tax administration, the bankruptcy attorney ceases to be the attorney of record. The attorney thereafter may not receive the debtor’s return information without the debtor’s express oral or written consent (a completed Form 2848 prior to discussing any return information), even if the information related to tax periods or matters clearly administered by the bankruptcy court.
Attorney’s representative NONE, with the following exception:
Item 5 (Additional acts authorized) of Form 2848 allows a "write-in" for re-designation of authority to allow the holder of Form 2848 to re-designate his authority to others.
Aside from the debtor’s attorney, no disclosure of the debtor's return information may be made to employees of the law firm representing the debtor unless the debtor has given oral or written consent with the exception annotated in the box to the left.
Form 8821, Tax Information Authorization, item 2 (Appointee), permits the debtor to directly delegate authority to employees of the firm to receive tax information, but not to act on the debtor’s behalf.
CPA/Tax Preparer NONE, with the following exception:
Returns can permit "Check the Box" authorization to be extended to a third-party designee, which can include a preparer. However, the "Check the Box" authorization ends after the return is processed or by the return due date, without regard to extensions, whichever is earlier.
For bankruptcy purposes, the CPA/Tax Preparer of the debtor’s tax returns is not permitted to receive any disclosure of tax return information unless the debtor has given oral or written consent. See IRM 11.3.2.5.2,Preparers, for exceptions outside the scope of bankruptcy.
Trustee In a bankruptcy proceeding pertaining to tax administration, pre-petition returns and return information pertaining to the debtor or bankruptcy estate may, upon written request, be disclosed to the trustee. Also, in cases where the trustees have fiduciary responsibility, hence a material interest, to prepare returns and pay taxes (tax administration purposes), they have authority for access to the same, irrespective of whether the return is pre or post-petition. (See IRC § 6103(e)(4), (5), and (7);IRC § 6103(h)(4); and IRM 11.3.2.4.12, Bankruptcies.)
Note: In involuntary bankruptcies, no disclosure may be made to the trustee until the order for relief has been entered or unless the court finds that such disclosure is necessary for purposes of determining whether an order for relief should be entered (IRC § 6103(e)(5)(C)).
Trustees are not allowed to receive information on any tax returns for periods after the petition date unless the debtor has given oral or written consent, except for claims filed in Chapter 13 cases under § 1305, or for tax obligations incurred post-petition, while the trustee is operating the debtor’s business. IRC § 6103(e), Disclosure to persons having material interest, generally does not permit disclosures to the United States Trustee or the standing Chapter 13 trustee; however, such disclosures may be permitted in the context of a judicial proceeding if the bankruptcy case pertains to tax administration.
Bankruptcy Paralegal NONE, with the following exception:
Item 5 (Additional acts authorized) of Form 2848 allows a write-in for re-designation of authority to allow the holder of Form 2848 to re-designate his authority to others.
Generally, bankruptcy paralegals are not allowed to receive tax return information unless the debtor has given oral or written consent.
Other third-party NONE, generally; however, see IRM 11.3.2.2(4), General Rules, IRC § 6103(k)(6) disclosure for investigative purposes and IRC § 6103(h)(4), disclosure in an administrative or judicial tax proceeding. Other third parties may receive the debtor’s return information if they have sufficient material interest, pursuant to IRC § 6103(e). (See IRM 11.3.2.2(3), General Rules.) Generally, third-parties are not allowed to receive tax return information unless the debtor has given oral or written consent.
Holder of a Form 2848, Power of Attorney and Declaration of Representative(POA) POAs are allowed to receive tax returns and return information only for the tax periods listed on the Form 2848. POAs are not allowed to receive tax returns or return information for any tax periods not listed on the Form 2848, unless the debtor has given oral or written consent.
Corporate officers May receive tax returns and return information of corporations for which they signed the tax return in question, or have the authority legally to bind the corporation in accordance with state law, and are still employed by the corporation in the same capacity and with the same authority. (See IRC § 6103(e)(1)(D) and IRM 11.3.2.4.3, Corporations.) May not receive returns or return information if no longer employed by the corporation or if no longer a current corporate officer.
Partners May receive tax returns and return information on partnerships for which they were a general or limited partner of the partnership during any part of the period covered by the return. (See IRM 11.3.2.4.2(1), Partnerships.) May not receive information on individual income tax returns of the partners or returns or return information of the partnership for which a Schedule K-1 was not filed for the person requesting the disclosure or for which the person was not a general or limited partner of the tax return period in question. (See IRM 11.3.2.4.2(1), Partnerships.)
US Bankruptcy Court All matters in tax administration cases of the debtor or bankruptcy estate, generally pre-petition returns and return information to the extent authorized by IRC § 6103(h)(4). (See IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes.) With the exception of matters concerning administrative expenses and § 1305 claims, the bankruptcy court is generally not allowed to receive information on any tax returns due and owing after the petition date unless the debtor has given oral or written consent.
Chief Counsel May receive returns and return information on cases currently in litigation, in anticipation of litigation, and for purposes of issuing a legal or technical opinion or as otherwise needed for a tax administration purpose in the course of official duties. (See IRM 11.3.22.4, Access by Employees of the Office of Chief Counsel, and IRC § 6103(h)(1).) Tax return information may not be disclosed to Chief Counsel employees who do not have a need to know the information to perform their official duties.
AUSA/DOJ May receive returns and return information on cases currently in litigation, in matters of tax administration if the taxpayer is a party to the proceeding, or the proceeding arises out of, or in connection with, determining the taxpayer's civil or criminal liability, with respect to tax. Third-party return information may also be disclosed if the item or transaction test of IRC § 6103(h)(2)(B) or (C) is met. (See IRM 11.3.22.10.1, What May be Disclosed, and IRC § 6103(h)(2)(A).) AUSA/DOJ cannot receive tax return information on cases that have not been referred to them as matters of tax administration (IRC § 6103(h)(2) and (3)).
In non-tax criminal matters, such as bankruptcy fraud, requests from AUSA/DOJ should be referred to the Disclosure Officer per IRC § 6103(i), Disclosure to Federal officers or employees for administration of Federal laws not relating to tax administration.
Internal IRS employees May receive returns and return information on a need-to-know basis where the employee's official duties require such disclosure. This may include a manager, a lead, or an OJI. (See IRM 11.3.22.2.1, Access by IRS Employees Based on "Need to Know," and IRC § 6103(h)(1).) Tax return information may not be disclosed to IRS employees who do not have a need to know the information to perform their official tax administration duties.
Form 8821, Tax Information Authorization Holders of Form 8821 are allowed to receive tax return information only for tax periods listed on the Form 8821. Form 8821, line 3, column d, lists restrictions. If nothing is listed in column d, then any information may be disclosed within the limits of the Form, column b, and Period, column c. Holders of Form 8821 are not allowed to represent the debtor before the IRS, nor receive copies of returns without an accompanying written request for Form 4506, Request for Copy of Tax Return, or Form 4506T, Request for Transcript of Tax Return.

Disclosure References are:

  • IRM 21.1.3.3, Third Party (POA/TIA/F706) Authentication

  • IRM 21.1.3.2.4, Additional Taxpayer Authentication

  • IRM 11.3, Disclosure of Official Information

  • IRM 11.3.2, Disclosure to Persons with a Material Interest

  • IRM 11.3.3, Disclosure to Designees and Practitioners

  • IRM 11.3.22, Disclosure to Federal Officers and Employees for Tax Administration Purposes

  • Bankruptcy Disclosure Handbook, Document 9225

  • IRC § 6103, Confidentiality and disclosure of returns and return information

Common IDRS Adjustments

ADJUSTMENT IRM REFERENCES ORAL STATEMENT AUTHORITY - TOLERANCES
Address Change or Correction
  • IRM 3.13.5.56, Inputting Domestic Address Changes

  • IRM 3.13.5.47, Updating Address Records

  • IRM 3.13.5.28, Entity Changes from Oral Statements

  • IRM 3.13.5.29, Oral Statement/Telephone Contact Address Change Requirements

An oral address change can be made if the necessary verification is provided. If the required verification cannot be provided, the taxpayer must provide a Form 8822, Change of Address, before the address can be changed. When an address is updated through an oral statement, advise the taxpayer to also change their address with the local United States Post Office.
Name Correction
  • IRM 3.13.5.118, Correcting a Taxpayer’s Name

NOT APPLICABLE
Credit Transfer
  • Exhibit 21.5.8-1, Transaction Codes and Reversals

  • IRM 21.5.8, Credit Transfers

  • IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48

There are no oral statement ceiling amounts/dollar limits, but credits must be available for transfer on IDRS.
Installment Agreements, Reinstatements, Revisions, Extension of Time to Pay
  • Exhibit 5.19.1-5, IDRS Input of Short Term Payment Plans, 120 Days or Less, CC IAREV for AM/ACS/ACSS/CSCO/FA

  • Exhibit 5.19.1-6, IDRS Input of IAs, CC IAORG

  • Exhibit 5.19.1-7, IDRS Input of IAs, CC IAREV

  • Exhibit 5.19.1-8, IDRS Input of Pre-Assessed IAs and Short Term Payment Plans

Streamlined installment agreement criteria for dollar amounts and time limits are in effect. (See IRM 5.14.5, Streamlined, Guaranteed and In-Business Trust Fund Express Installment Agreements.)
Transcript Request
  • IRM 21.2.1.53, E-Services

NOT APPLICABLE
Correct Unpostables
  • IRM 3.12.32, General Unpostables

  • IRM 3.12.32.22, General Information for GUF Command Code Screen Formats

  • Exhibit 2.3.37-1, Input Display UPTIN

  • IRM 21.5.5, Unpostables

  • IRM 21.5.5.3.2, Researching Unpostables on IDRS

NOT APPLICABLE
Input/Reverse TC 520
  • IRM 5.9.5.6, Bankruptcy “Freeze” Code (TC 520)

  • IRM 5.9.5.6.1, Closing Codes

  • IRM 5.9.5.6.2, Reversing the Bankruptcy Indicator

  • IRM 5.9.17.16, Reversal of Freeze Codes (TC 521)

  • IRM 5.9.17.2, Lift of Stay and Reversing the Bankruptcy Freeze

  • IRM 2.4.19, Command Codes REQ77, FRM77 and FRM7A

NOT APPLICABLE
Input TC 971
  • IRM 5.9.17.21, Adjustment Methods for Discharged Liabilities

  • IRM 21.5.1.4.8, Transaction Code 971

  • IRM 2.4.19, Command Codes REQ77, FRM77 and FRM7A

NOT APPLICABLE
IDRS History Items
  • Exhibit 2.3.12-1, ACTON Input Format

  • IRM 21.2.2.4.2.1, IDRS History Items and Account Inquiry

NOT APPLICABLE
Delete Adjustment Inputs (same-day)
  • Exhibit 2.4.13-2, Input Format, CC TERUPC

NOT APPLICABLE
Control Bases
  • Exhibit 2.3.12-1, ACTON Input Format

  • IRM 21.2.2.4.2, IDRS Case Controls

NOT APPLICABLE
Closing TDI
  • IRM 5.19.2.6.8.2, Resolving TDI Research (TC 594/599) Transcripts

NOT APPLICABLE
Dummy Module
  • IRM 21.2.2.4.4.1, Taxpayer Information File (TIF)

  • IRM 2.3.12.2, Case Control Using Command Code ACTON

NOT APPLICABLE
Stop Refunds
  • IRM 21.4.1.5.10, Refund Intercept Command Code NOREF with Definer “P”

  • IRM 21.4.5, Erroneous Refunds

NOT APPLICABLE

The IDRS Command Codes Job Aid on SERP provides directions for IDRS inputs.

Oral Statement Authority is explained in IRM 21.1.3.20.

Tolerances are given in IRM 21.5.1.4.12.

Approved Insolvency Letters

Letters to Debtors and Third Parties. The following table lists Insolvency letters by number and explains their uses.

Letter Title To CH CC Originator (caseworker)
Letter 982 Fiduciary Payment of Claim Trustee or DIP 11 N/A FI
Letter 983 Closed Proof of Claim Trustee 7A, 11, 12, and 13 Debtor & Attorney FI
Letter 984 Request for Payment from Trustee Trustee 7A, 11, 12, and 13 N/A FI
Letter 985 Court Acknowledgment of Proof of Claim Court 7A, 11, 12, and 13 N/A FI
Letter 986 Letter to Fiduciary Trustee or DIP 7 and 11 N/A FI
Letter 1714 Request for Missing Tax Return(s) Debtor 7A, 11, 12, and 13 N/A FI
Letter 2173 Adequate Protection Debtor 11 Attorney FI
Letter 2273-C Installment Agreement Acceptance; Terms Explained Debtor 7, 11, 12, and 13 N/A CIO / FI
Letter 2975-C Notice of Defaulted Installment Agreement Under IRC 6159(b) Debtor 7, 11, 12, and 13 N/A CIO / FI
Letter 3923 Delinquent Plan Payment Chapter 11 Debtor 11 Trustee FI
Letter 3924 FTD Liability Debtor 11 N/A FI
Letter 3925 Plan and Disclosure Statement Request Court 11 Attorney FI
Letter 3926 Plan Status Letter Trustee 13 N/A FI
Debtor 11 N/A FI
Letter 3927 Post-Petition Liability Debtor 13 N/A FI
Letter 3928 Request for Business Info Trustee & Debtor 13 and 7A Attorney FI
Debtor 11 and 7A Attorney FI
Letter 3929 Stat 60 Letter Debtor 7A, 11, 12, and 13 N/A CIO / FI
Letter 3930 Request to Withdraw Administrative Proof of Claim Court 7A, 11, 12, and 13 Attorney & Debtor FI
Letter 3931 Request to Withdraw Proof of Claim Court 7A, 11, 12, and 13 Attorney & Debtor FI
Letter 4066 Notice of Intent to Levy CDP Rights Debtor 7N N/A FI
Letter 4067 Final Notice of Intent to Levy - No CDP Debtor 7N N/A FI
Letter 4068 Post-discharge Letter Seeking Payment Debtor 7N N/A FI
Letter 4111 Chapter 7 Plan Balance Debtor 7N N/A CIO
Letter 4114 Bankruptcy Discharge Determination Debtor 7, 11, 12, and 13 N/A CIO / FI
Letter 4521 Non-Debtor Spouse - Bankruptcy Joint Liabilities Non-Debtor Spouse 11 and 13 N/A FI
Letter 4553 Excluded Property - Soft Notice Debtor 7N N/A FI
Letter 4554 Excluded Property - Final Notice with CDP Rights Debtor 7N N/A FI
Letter 4556 Excluded Property - Final Notice Without CDP Rights Debtor 7N N/A FI
Letter 4914 Notice to Individual Chapter 11 Debtor Regarding Income Tax Filing Responsibilities Debtor & Trustee 11 N/A FI
Letter 5947 Missing Information for Prompt Determination 505(a) Request Trustee 7, 11, 12, and 13 N/A CIO
Letter 5948 Missing Information for Prompt Determination 505(b) Request Trustee 7, 11, 12, and 13 N/A CIO
Letter 6089 Trustee Turnover Request Response Trustee 7 and 13 N/A CIO
Letter 6141 Request for TIN Debtor 7, 11, 13, and 13 Trustee & Attorney CIO

Note:

When correspondence requests the debtor or debtor’s representative to provide information, complete an action, or file returns, the correspondence should communicate a reasonable and specific action date and advise of potential consequences if the action date is missed. All correspondence to debtors must include the caseworkers name, contact telephone number, and employee identification number.

Reminder:

If the debtor is represented by a valid Power of Attorney (POA), copies of all correspondence must be sent to the POA.