U.S. Bankruptcy Courts like the U.S. Tax Court, Federal Court of Claims and Federal District Courts has jurisdiction to adjudicate tax disputes between the I.R.S. and taxpayers. Which of these courts is the best to resolve a tax dispute with the I.R.S. turns on a number complicated legal, financial and practical considerations. Under the right circumstances, Bankruptcy Courts very well might be the most favorable forum to seek resolution of such a dispute. Our law office will make assist you in making this critical decision should you be facing a dispute with the I.R.S which will only be resolved by litigation
Bankruptcy Courts decide tax disputes for Chapter 7, Chapter 11, or Chapter 13 filers with regard to both federal and state taxes, including the validity or amount of IRS deficiency claims, the validity of IRS tax liens, and the right to discharge federal tax debt.
Bankruptcy Courts may rule on the merits of any tax claim involving an unpaid tax, fine or penalty relating to a tax, or addition to tax of a debtor (or of the bankruptcy estate), whether or not the tax, fine, penalty or addition to tax has been previously assessed or paid, provided the tax or other amount has not been previously adjudicated before a court of competent jurisdiction in a contested proceeding.
A Bankruptcy Court may order the IRS to issue a refund, and taxpayers need not prepay a proposed tax liability. Nevertheless, the regular administrative procedures must still be followed in order to obtain a refund, unless the refund results from an offset or counterclaim to a claim or request for payments by the taxing authority.