Section 15. Payments in Bankruptcy›5.9.15 Payments in Bankruptcy
Chapter 7 Asset Trustee Checks
Internal Revenue Manual Part 5. Collecting Process · 2026-10-03 edition · updated 2026-10-04 · United States
Chapter 7 Asset Checks. The Chapter 7 trustee sends payments based on properly filed proofs of claim after the trustee liquidates the debtor's assets. Some claimants may not receive a distribution in a Chapter 7 Asset filing. IRM 5.9.17.10(5), Asset Discharge for Individual Debtor, gives instructions for handling individual Chapter 7 Asset cases while awaiting distribution, and IRM 5.9.17.12, Closing Corporate Chapter 7 Bankruptcies and Chapter 7 Bankruptcies Filed by Limited Liability Companies, explains approved procedures for corporate cases in 7 Asset proceedings.
Payment Application. When the distribution payment from the Chapter 7 trustee is received, the payment is applied based on the trustee's instructions, or:
IF...
THEN...
The trustee does not specify how the payment is to be applied.
Follow IRM 5.9.15.3 (2), Bankruptcy - Involuntary Payments.
The liability has been adjusted.
Follow IRM 5.9.15.3 (3), Dischargeable Liabilities.
Once the tax period has been identified, the caseworker should follow the posting procedures in IRM 5.9.15.15.5, Non-Plan Payments. Voucher(s) and check(s) must be sent to the Campus Support function.
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