WHAT IF THE IRS COLLECTS ON A DISCHARGED DEBT POST-BANKRUPTCY ?

Posted by Kevin Ryan | Sep 18, 2015 | 0 Comments

I have been involved in several matters over the years where a client informed me that the Internal Revenue Service resumed collection of income taxes which were discharged in a bankruptcy case.  The question of whether income taxes can be discharged is better left to another post.  However, the main point to be made here is that an individual can take legal action to protect his or her rights.  An individual can take legal action against the Internal Revenue Service to obtain a judgment requiring the IRS to return any money or property unlawfully collected from a debtor post-bankruptcy as to a federal income tax debt which was discharged in the debtor's bankruptcy case.

In the United States of America, the Equal Access to Justice Act (EAJA) authorizes the payment of attorney's fees to a prevailing party in an action against the United States absent a showing by the government that its position in the underlying litigation “was substantially justified.  A bankruptcy case can be reopened by the Debtor by filing a motion and setting a hearing date. Some Courts, such as the U.S. Bankruptcy Court for the Southern District of Alabama, provide a “negative notice” procedure where the Debtor provides a notice on the motion which informs the respondent that they have 21 days to respond or otherwise object.  The Court will issue an Order to reopen the case and waive the filing fee to reopen the case so long as the request is properly submitted by the Debtor or the Debtor's attorney.

Once the bankruptcy case is reopened, the Debtor can file an Adversary Complaint against the Internal Revenue Service.  The allegation would be that the Internal Revenue Service violated the Discharge Order issued under 11 U.S. Code Section 727 ( in a ch 7 case) or 11 U.S. C. Section 1328 ( in a ch 13 case).   The Debtor should include a claim for all of the Debtor's costs and attorney fees related to the filing and prosecution of the Adversary Complaint under the above-mentioned Equal Access to Justice Act, which specifically allows the Court to award attorney fees to the Debtor as part of it's Order.   The Debtor would also make a claim in the Adversary Complaint for all of the money and property seized by the Internal Revenue Service after the date of the Debtor's bankruptcy discharge, if in fact the seized funds and property were applied by the IRS to a discharged tax debt.

Bankruptcy and tax law can be very complex.  It is a good idea to contact an attorney who is familiar with bankruptcy and tax law, and experienced in bankruptcy litigation to address this type of issue.   Please feel free to contact attorney Kevin Ryan in Mobile Alabama to schedule a free office or telephone consultation.   Office Tel:  251-431-6012  / website:http://www.ryanbk.com

About the Author

Kevin Ryan

"I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. And I'll make them go away."  -Kevin Ryan, Attorney at Law Kevin Ryan is a graduate of the College of Wooster and the Cleveland Marshall College of Law. He is admitted to practice before all Alabama State Courts, the United States District Court for the Southern District of Alabama, and the United States Bankruptcy Court for the Southern District of Alabama. The United States Bankruptcy Court is a part of the United States District Court. Since 1998, Mr. Ryan has represented thousands of individual clients in bankruptcy, criminal, divorce, probate, personal injury, and real estate matters.  Attorney Ryan is also a licensed real estate agent in Alabama.  He handles  Bank-owned properties, short sales, and conventional sales in addition to conventional real estate listings.   This wide range of experience enables Attorney Ryan to take a wider look at your legal matter. It is important to consult with an attorney who can see from experience how other legal issues may affect your situation, and advise you accordingly. Personal Info Kevin Ryan is a member of First Baptist Church in Silverhill, Alabama. He resides in Silverhill with his wife Jessica and their three children. Committed to helping our Clients achieve a fresh financial start Our practice focuses primarily on consumer bankruptcy matters under Chapter 7 and Chapter 13 of the United States Bankruptcy Code.  Our law practice also includes matters where bankruptcy litigation, appellate work, or involvement in civil lawsuits is needed by a client.     No representation is made that the quality of any of these legal services is of higher quality than another attorney or law firm.   The United States Bankruptcy Code requires the following notice:  We are a Debt Relief Agency, which means we help people get legal relief from their Debts through the bankruptcy process. Interested in learning more about our bankruptcy attorney near Mobile, Alabama? Contact Us for help with chapter 7 bankruptcy or chapter 13 bankruptcy in Mobile, Baldwin and Washington counties. Education Juris Doctor, Cleveland Marshall College of Law, 1997 Employed full time as a paralegal while attending law school in the evenings. B.A., The College of Wooster, 1994 NCAA Div.III All Conference (N.C.A.C.) Football Team : Defense 1993; Most Inspirational Senior Award 1993; Co-captain 1993; Letterman 1991-1993; Phi Sigma Alapha Fraternity 1991-1994; Athletic Director Jurisdictions Admitted to Practice Alabama

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I'll BE there for you.

I'll never be the kind of attorney your creditors want me to be. I'll always be the kind of attorney you NEED me to be. Call me. I'll BE there for you. - Kevin Ryan, Attorney at Law

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