United States Bankruptcy Court

The United States Bankruptcy Court has jurisdiction to resolve a wide variety of tax issues concerning taxpayers who are in a pending bankruptcy case. The remedies available to a taxpayer in bankruptcy court vary depending on whether the taxpayer’s case is a Chapter 7, Chapter 13 or Chapter 11 case.

In all bankruptcies, the Court has jurisdiction to decide almost all disputes involving the IRS, state tax authorities and the taxpayer. Bankruptcy courts will determine, among other things, the amount or validity of a deficiency claim by the IRS, the validity and extent of IRS tax liens, the “value” of IRS lien rights and the taxpayer/debtor’s right to a discharge of tax liabilities asserted by the IRS.

Bankruptcy court is often a more taxpayer friendly forum. Other than the U.S. Tax Court, it is the only forum in which a taxpayer can contest a tax liability prior to making payment of the alleged liability and then seeking a refund. For those reasons, the amount of tax litigation heard in bankruptcy court is growing rapidly.

Bankruptcy court tax cases are heard by a single federal judge and without a jury.