SECTION 2. PURPOSE AND SCOPE

.01 Purpose

This process is being tested as a re

sponse to the growing volume of bankruptcy cases nationwide. It is intended to alleviate Service-related litigation in U.S. Bankruptcy Courts (established under Title 28 U.S.C. § 151) and to provide debtors with a fast and effective means to resolve their disputes. These procedures provide for a thorough review of the debtor’s dispute with the Service and offer an expedited appeal of any adverse determination. Service representatives will have substantial authority to settle disputes under these procedures as well as the authority to make all appropriate changes to taxpayer accounts. If a bankruptcy dispute is also eligible for the Collection Appeals Program (CAP – see IRS Publication 1660), taxpayers are requested to use this bankruptcy process instead because it is specifically designed to resolve bankruptcy disputes.

.02 Disputes Eligible for Consideration Under the Bankruptcy Procedures

The following issues may be considered under the Bankruptcy Appeals Process:

This process is designed to resolve disputes between the Service and a debtor or a debtor’s estate at the earliest possible date after the debtor has commenced the bankruptcy proceeding. Only the debtor or the debtor’s estate may seek resolution of the issue with the Service by following the procedures set forth in this announcement. The Bankruptcy Appeals Process is not available to third parties, such as competing creditors, creditors’ committees, responsible persons of the debtor, or other interested parties because of potential disclosure of taxpayer information that is protected by I.R.C. § 6103. These third parties can address their concerns, including those regarding any settlement between the debtor or the debtor’s estate and the Service, through existing Bankruptcy Court procedures.

O Dischargeability determinations

–other than when the Service asserts

lack of dischargeability under

B.C. § 523 (a)(1)(C) for willful evasion of taxes O Proof of Claim and administrative

claim issues O Automatic stay violation issues O Setoff and refund issues O Preferences

1997–47 I.R.B. 15 November 24, 1997

Court, however, the Bankruptcy Appeals Process is not available. SPf will advise the debtor whether the debtor may begin the Bankruptcy Appeals Process or must wait until other Service functions complete their work.

.02 Contacting the IRS for Informa- tion or Entry into the Bankruptcy Appeals Process

Information about the Bankruptcy Appeals Process will be provided by the Office of Appeals. The Appeals site on the World Wide Web contains a reprint of this Announcement and may contain other useful information. The address is:

http://www.irs.ustreas.gov/prod/ind_info/

appeals/index.html Appeals can also be contacted directly at each test site with inquiries about this Process. The Appeals office phone and FAX numbers are:

.03 The Bankruptcy Appeals Process

Disputes will be reviewed initially by the Office of Special Procedures within the Collection Division (SPf). SPf will evaluate the merits of the debtor’s position and make a determination of the IRS’s position. If this decision is adverse to the debtor, SPf will review the determination at the debtor’s request. If the final decision of SPf is adverse to the debtor, the debtor may appeal the decision to the Office of Appeals. The Office of Appeals will then review the matter and make an independent decision. Where appropriate, Appeals may offer a settlement in order to avoid litigation. During processing of the dispute, the debtor will have an opportunity to confer with IRS representatives. However, due to the volume of bankruptcy disputes, it is anticipated that all conferences will be conducted over the telephone. The processing for disputes should be about 15 days if no appeal is

needed, and will generally be 30 days if an appeal is requested.