Bankruptcy Cases.

• Author: Laffie, Lesli S.

Ann. 98-89 provides that the IRS has undertaken a new initiative to improve its procedures for handling bankruptcy cases. The procedures are intended to:

1. Minimize the likelihood that IRS collection actions will inadvertently violate the bankruptcy laws.

2. Facilitate prompt correction of violations that do occur.

3. Provide an administrative process for handling any claims for damages that arise from such violations. The initiative includes new administrative measures to speed the processing of bankruptcy matters. The IRS has designated specific points of contact who will coordinate the handling of violations of the automatic stay and the discharge injunction of the bankruptcy laws. These contact points will be part of the Special Procedures Function (SPF) in the local IRS Collection Division. SPF will expeditiously handle these cases according to specific time guidelines, to ensure compliance with the bankruptcy laws. These procedures will also be reflected in the next version of Internal Revenue Manual Part V, Bankruptcy Handbook 5.9. In addition, the IRS is notifying bankruptcy practitioners throughout the U.S. of the address in each district to which bankruptcy petitions and all other related correspondence should be sent.

The initiative also provides for a pilot program to test administrative procedures for handling any claims for damages debtors may have when the IRS has failed to properly comply with the bankruptcy laws. Under Sec. 7433, as amended by the IRS Reform and Restructuring Act of 1998, debtors may be entitled to recover damages for actual economic losses they sustain from the Service's willful violation of the bankruptcy laws. Attorneys' fees may also be available under Sec. 7430.

While the new procedures are intended to minimize such violations, the IRS deems it appropriate to test a simplified administrative process for handling cases in which debtors believe they have suffered damages because of improper IRS...