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Guest presenters from the Internal Revenue Service recently provided MSBA’s Consumer Bankruptcy Section members with an insiders’ perspective on tax debt considerations during the latest session of the Mary Park McLean Brown Bag Lunch Program series. 

Although tasked with illuminating two of the most inscrutable areas of the law, the IRS officials were able to constructively highlight key issues and offered attendees valuable insights and warnings about common pitfalls.

“If the IRS is not properly notified, it may cause a continuation of tax enforcement actions,” said Jim McDonough, IRS Insolvency Group Manager in the Baltimore office. “In addition, the individual could emerge from bankruptcy still owing federal taxes.” 

Further topics covered in the brief lunch hour session included the automatic stay and its exceptions, unfiled tax returns, and more.

Officials described the relationship between IRS field offices, which have nearly 400 bankruptcy specialists scattered nationwide, and its Centralized Insolvency Operation, which has about 80 personnel based in Philadelphia.  

MSBA members learned about bankruptcy’s effect on offers in compromise, installment agreements, and requests for innocent spouse relief.

One IRS official peeled back the curtain a bit to reveal the government’s strategy at the initial meeting of creditors, known as a 341 meeting. 

“We encourage our bankruptcy specialists to attend the 341 [meeting of creditors] so we can question the debtor under oath with regard to their unpaid tax liability and unfiled returns,” said Marla Brockenton, IRS Insolvency Group Manager in Buffalo, N.Y.. “We will secure trust fund recovery penalty information, discuss self-employment tax issues, and question the value of assets.” 

The IRS will set deadlines for any unfiled returns at the 341 meeting, Brockenton also noted.

Presentation slides from the panelists are available for download, which are chock-full of crucial information including the addresses and telephone numbers for various IRS departments relevant to bankruptcy filings. These materials alone are sure to leave members feeling satiated long after the live, lunchtime webcast.

McDonough and Brockenton from the IRS appeared alongside their colleagues Andrew Avon, Insolvency Group Manager in Pittsburgh and Bill Gregg from the Office of Chief Counsel in Washington, DC. William Steinlittle, the Consumer Bankruptcy Section’s incoming chair, introduced the panel.

MSBA members can download materials and watch the event here.