5.11.a Compare With Case Of An Ordinary Creditor

• Jurisdiction: United States

a. In general

The issue of dischargeability of debt is a question of federal law, and not state law. In re Berr, 172 B.R. 299 (9th Cir. BAP 1994). Adjudication of dischargeability may, in fact, be reserved exclusively to the bankruptcy courts. In re Houtman, 568 F.2d 651 (9th Cir. 1978). But held, bankruptcy court does not have exclusive jurisdiction to adjudicate discharge of taxes and such issues may be determined by non-bankruptcy courts. In re Otto, 311 B.R. 43 (Bankr. E.D. Pa. 2004).

If the tax is clearly dischargeable, the IRS is required to recognize it as such; Int. Rev. Manual § 57(13)4.42.

James I. Shephard notes:

It should be noted at the outset that the IRS recognizes that a tax liability will be discharged unless specifically identified as nondischargeable, if the debtor is otherwise entitled to a discharge. (cites) The effect of ... the Bankruptcy Code is that the debtor is discharged from a tax debt, if in...